Does recoverable depreciation go to the contractor?
Short answer. Not directly. The insurer pays recoverable depreciation to you, the policyholder, and usually to your mortgage company if it is named on the check, after the work is done. You then use it to pay the contractor's remaining balance, because the contract price normally equals the full replacement cost that the depreciation is part of.
Think of the claim as one price paid in two installments. The adjuster's replacement cost estimate is the full price of the job. The first check is that price minus depreciation and minus your deductible. The second check, the recoverable depreciation, arrives after the work is finished. A contractor who agrees to do the job for the insurance price is counting on both checks plus your deductible.
How the money usually moves
- You sign a contract, ideally for the insurer's approved scope and price.
- The first check goes toward materials and the deposit, as your contract states.
- After completion the contractor gives you a final invoice, and you or they submit it to the insurer.
- The depreciation check is issued in your name, often with your mortgage company too, and you endorse it toward the final balance.
What to watch for
- Do not sign over your benefits. In Georgia, a contractor taking an assignment of your insurance proceeds within one year of a declared natural disaster is an unfair practice under SB 201. Paying a contractor from a check you endorse is different from assigning the claim.
- Your deductible is yours. Georgia contractors cannot waive or rebate it, so expect the contract total to include it.
- Upgrades are separate. If you add items the insurer did not pay for, that portion is your cost, and it does not raise the depreciation check.
- Lower price, lower release. If the contract is below the estimate, the insurer generally pays only up to what was actually spent.
More detail: assignment of benefits in Georgia and when the mortgage company is on the check.