We get more questions about Recoverable Depreciation than any other portion of the claims process, and we don’t blame you for being confused. Recoverable Depreciation and how it impacts your claim can be very unclear.
What is Depreciation?
Your home and contents may lose value over time due to age, wear and tear, or obsolescence. This loss of value is called depreciation and should be detailed on the estimate or payment documentation provided by your Insurance Adjuster.
For example, looking at a roof damage claim, the cost of replacing the roof may be $ 10,000. However, after applying depreciation on your existing roof, the payment you receive from your Insurance Company may come to $ 8,000.
Is Depreciation Recoverable?
In most cases, yes, however this does depend on the type of Insurance Policy you do have. While most policies are Replacement Cost Policies, allowing the policyholder to recover the depreciation amount once repairs have been completed, Actual Cash Value Policies do not, adding to the out of pocket cost for the policyholder. We always recommend discussing the depreciation with your Insurance Adjuster to make clear how depreciation will be handled and what deadlines there will be in order to collect recoverable depreciation.
Prior to a claim, you can speak with your Local Insurance Agent to determine whether you presently have a Replacement Cost Policy or an Actual Cash Value Policy, and to make any changes to your policy that you may wish.
How do I Recover Depreciation?
If you have a Replacement Cost Policy, you will be able to collect the Recoverable Depreciation once the repairs have been completed or the item has been replaced. To do so, contact your Insurance Adjuster to advise of the completion of the project and make arrangements for this final payment on your claim. You may need to provide photos or receipts showing the work completed or schedule a site inspection with your Adjuster to go over the completed repairs.
There will likely be a deadline for completing the project and recovering your depreciation (Generally 1 Year) so it is important to address the repairs and depreciation timely. If you feel you will not meet the deadline for collecting the recoverable depreciation, it is important to contact your Insurance Adjuster in order to request an extension of this deadline.
At Disaster Blaster, we understand how confusing and stressful a homeowners claim can be and hope this helps you better understand Recoverable Depreciation and how it impacts your homeowner’s claim! Should we be of assistance to you, please do not hesitate to contact your local Disaster Blaster office!
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