Property claims glossary
What is recoverable depreciation?
Recoverable depreciation is the depreciation held back from the first actual cash value payment that the insured can collect once repairs or replacement are completed, within the time the policy or state law allows. It matters because it can be a large share of the claim, and families who are not told it is available may never claim it.
Worked example · fictitious claim
A roof claim totals $24,000 RCV, with $8,000 of depreciation and a $2,000 deductible. The first payment is $24,000 − $8,000 − $2,000 = $14,000. When the family sends the roofer's final invoice for $24,000, the carrier releases the $8,000, bringing the total paid to $22,000.
How it affects a settlement
Recoverable depreciation changes when money is paid, not whether it is owed: it is released after the work is done and documented, generally up to what the repair actually cost. If an endorsement makes the item actual cash value only, the depreciation is not recoverable.
In practice
Depreciation withheld from the initial ACV payment that the policyholder can claim back after completing repairs within the policy's (or state's) deadline. Whether it was flagged in the decision letter often determines whether the policyholder ever recovers it.
Related
Depreciation · Actual cash value (ACV) · Property claim walkthrough · property claims glossary