Is recoverable depreciation guaranteed?
Short answer. No. Recoverable depreciation is owed only if your policy settles that property at replacement cost, the work is actually completed, and you claim it within the policy's time limit, and it is capped at what the work really cost. Miss any of those and you can receive less or nothing.
The conditions behind the word recoverable
- Replacement cost terms apply. An estimate may label depreciation recoverable, but an endorsement such as an actual cash value roof can change that for the roof.
- You finish the work. Selling the house, keeping the money, or patching instead of replacing usually forfeits it.
- You meet the deadline. Many forms require notice of intent to repair within 180 days of the loss, and carriers set completion deadlines.
- You spend the money. Payment is limited to the lesser of the estimate's replacement cost and your actual cost.
Situations that commonly reduce it
- The roof was replaced but gutters the estimate included were not
- A relative did the work for the cost of materials
- The home sold mid claim with no written agreement about who finishes the work
- A reinspection reclassified some items as non-recoverable
How to protect it
Read the summary page of your estimate for the recoverable and non-recoverable totals, confirm the deadline in writing, and hire a contractor whose price and scope match the approved estimate. If a recoverable amount is withheld without a policy reason, ask for that reason in writing and escalate if needed. See recoverable depreciation on a roof and ACV vs RCV.