What does recoverable depreciation mean on an insurance claim?
Short answer. On an insurance claim, recoverable depreciation means money you are owed but not paid yet: the insurer deducted it from your first check for the age of the damaged property and will pay it after you complete the repair or replacement. In plain terms, it is the second part of your claim payment.
A plain-English comparison
Think of it like money held in escrow. The insurer agrees on the full price, pays most of it now, and keeps the rest until it sees the job done. Once you show the invoice, the rest is paid.
Common misunderstandings
- The insurer took that money. No. It is held, not deducted for good, as long as your policy pays replacement cost.
- It is my deductible. No. The deductible is separate and is never paid back.
- I get it no matter what. No. You must complete the work within the policy's time limits.
- I can collect it and pocket the difference. No. The insurer pays up to what you actually spend.
- The contractor collects it. The check comes to you and any mortgage company; you pay the contractor.
How to find yours
Look for lines labeled recoverable depreciation, depreciation holdback, or RC holdback on the estimate summary and the payment letter. If you only see non-recoverable depreciation, that part of your claim is on actual cash value terms.
Related: recoverable depreciation on a roof, ACV vs RCV, and mortgage company on the check.