Why is there non-recoverable depreciation on my insurance claim, and can I challenge it?
Short answer. Depreciation is marked non-recoverable when your policy pays that item at actual cash value only, most often because of an actual cash value roof endorsement, a roof payment schedule, or a category like fences that standard forms settle at actual cash value. You can challenge the amount if the age, life expectancy or classification is wrong, but not the policy term itself.
Common reasons it shows up
- Roof endorsement. An actual cash value roof or payment schedule makes roof depreciation permanent.
- Structures that are not buildings. Fences and similar items are paid at actual cash value on many standard forms.
- Contents without replacement cost. Personal property insured on an actual cash value basis.
- A missed deadline. Recoverable depreciation can effectively become non-recoverable if the work is not done in time.
- Your choice. Taking a cash settlement without repairing.
What you can challenge
- Wrong roof age. Prove the install date with an invoice, permit or warranty registration.
- Short life expectancy. Ask what life was assigned to your material and why.
- Heavy condition adjustment. Photos showing a roof in good shape before the storm help.
- Misclassification. An item your policy settles at replacement cost should not be marked non-recoverable.
Ask the adjuster in writing for the basis. If it is still wrong, request a reinspection, and if you disagree about the amount of loss, your policy's appraisal clause may apply.
What you cannot change mid claim
The endorsements in force on the date of loss control the claim. Once a new roof is on, though, you can ask your agent whether replacement cost terms are available going forward.