Recoverable depreciation is the portion of your claim payment the insurance company holds back until you actually complete the repairs. On a replacement-cost (RCV) policy, the carrier first pays what your damaged property was worth used — the actual cash value (ACV) — and releases the difference up to replacement cost once you show the work was done. That held-back difference is the recoverable depreciation.
It exists to make sure claim money rebuilds homes rather than settling as cash for depreciated property. Nothing about it is a penalty — but plenty of homeowners leave it uncollected by not knowing the release step exists.
How does recoverable depreciation work in practice?
Say a covered water loss ruins flooring that was installed years ago. The adjuster's scope prices its replacement at today's cost, then subtracts depreciation for the flooring's age and wear. Your first payment reflects the depreciated (ACV) figure; the depreciation amount is listed on the settlement summary as recoverable. When the new flooring is installed and you submit completion documentation — invoices, photos, sometimes a certificate of completion — the carrier releases the held amount.
The paperwork is the whole game. Carriers release depreciation against evidence of completed, like-kind repairs: line-itemed invoices that map to the approved scope, proof the work matches what was scoped, and receipts. A restoration contractor who documents to carrier standards produces exactly that trail as a byproduct of the job — one of the quiet ways Summit's claims discipline pays the homeowner back.
Recoverable vs. non-recoverable depreciation — which do I have?
It depends on your policy's valuation basis. Replacement-cost policies make depreciation recoverable; actual-cash-value policies (and specific ACV endorsements, most commonly on aging roofs) do not — the depreciated payment is the payment. The settlement summary usually labels which is which, and your agent can confirm in one call.
This is worth checking before a loss, not after: an ACV roof endorsement quietly changes what a storm claim pays by exactly the roof's depreciation. If you're comparing policies, the RCV-vs-ACV line matters more than most premium differences.
What trips people up when collecting it?
Three misses come up over and over: not knowing there's money to claim (the settlement letter says “recoverable depreciation” and gets filed unread), missing the policy's time window for completing repairs and requesting release, and invoices that don't match the approved scope closely enough for the carrier's reviewer to reconcile.
All three have the same cure — treat the release as a planned final step of the project: calendar the deadline from your settlement letter, keep every invoice mapped to scope line items, and submit the release request with the completion documentation the same week the work wraps.
Questions we hear about this
Do I have to use the insurance money on the exact repairs scoped?
To recover depreciation, the completed work needs to correspond to the approved scope — like kind and quality. Upgrades are fine, but the carrier releases depreciation against the scoped amount, with betterment on your side of the ledger.
Is there a deadline to claim recoverable depreciation?
Most policies set a window for completing repairs and requesting release — commonly measured in months from the ACV payment. The controlling number is in your policy and settlement letter; find it early and calendar it.
My contractor's invoice is higher than the approved scope. What happens?
That's supplement territory, not depreciation territory: documented cost overruns get submitted for scope revision. Depreciation releases against the approved scope as it stands when work completes — another reason scope accuracy up front beats arguing later.
Next step
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