What is the difference between recoverable and non-recoverable depreciation?
Short answer. Recoverable depreciation is held back from your first insurance payment and paid later once you complete the repair or replacement. Non-recoverable depreciation is subtracted for good because your policy pays that item at actual cash value. Both reduce the first check, but only recoverable depreciation comes back.
Side by side
- When it is paid: recoverable, after completion and proof; non-recoverable, never.
- Why it exists: recoverable, replacement cost coverage that waits for proof you rebuilt; non-recoverable, actual cash value terms for that item.
- Typical items: recoverable, the house and roof on a standard replacement cost policy; non-recoverable, roofs under actual cash value or payment schedule endorsements, fences on many forms, and contents without replacement cost.
- Your job: recoverable, finish on time and submit the invoice; non-recoverable, confirm the amount and classification are right.
Same storm, two outcomes
Two neighbors each have a 16 year old roof replaced after the same hailstorm. Each estimate is $15,000 with $8,000 depreciation and a $1,500 deductible. The neighbor with replacement cost on the roof receives $5,500, then $8,000 after the job, for $13,500 in total. The neighbor with an actual cash value roof endorsement receives $5,500 and nothing more.
How to tell which you have
Look at the summary of your estimate for separate recoverable and non-recoverable totals, then confirm in the endorsements listed on your declarations page. Neither label changes the deductible, which is always yours. See ACV vs RCV and roof payment schedules.