What does less recoverable depreciation mean on an insurance estimate?
Short answer. Less recoverable depreciation is the line on your insurance estimate where the insurer subtracts depreciation it is holding back for now but will pay later, once the damaged property is repaired or replaced. It is a temporary deduction, unlike non-recoverable depreciation, which is subtracted for good.
Reading the summary page
- Replacement Cost Value: the full price to repair or replace.
- Less Recoverable Depreciation: the holdback, subtracted now and owed later.
- Less Non-recoverable Depreciation: subtracted permanently, if your policy pays some items at actual cash value.
- Actual Cash Value: what is left after depreciation.
- Less Deductible: your share of the loss.
- Less Prior Payments: anything already paid on the claim.
- Net Claim: the amount of this payment.
Below the net claim, many estimates repeat the total recoverable depreciation with a note that it may be claimed after the work is complete.
In homeowners insurance terms
A replacement cost homeowners policy typically pays only actual cash value until the repair or replacement is complete. The less recoverable depreciation line is that rule in action: the insurer is showing you what it is holding until the job is done.
What it does not mean
- It is not a penalty or a fee.
- It is not your deductible.
- It is not money you lose, as long as you complete the work within the policy's time limits.
Related: recoverable depreciation on a roof, ACV vs RCV, and Xactimate estimates explained.