What is recoverable depreciation on a homeowners claim?
Short answer. On a homeowners claim, recoverable depreciation is the age and wear deduction the insurer holds back on your dwelling, and on your belongings if they are covered at replacement cost, until you complete repairs or replace items. You collect it by finishing the work within the policy's time limit and sending proof of what you spent.
Protecting it from day one
- Day one: ask the adjuster whether your dwelling and contents are on replacement cost, and what the deadline is to collect the holdback.
- When the estimate arrives: find the recoverable depreciation total and write it down.
- Before signing a contract: make sure the contract scope matches the insurer's estimate, so the full amount can be released.
- During the work: document hidden damage for supplements.
- At completion: submit the invoice promptly.
Common homeowner mistakes
- Choosing a contractor whose price is far below the estimate, then being surprised that the release is smaller
- Spending the first check on other bills
- Assuming the contractor will request the release without confirming who is doing it
- Letting a mortgage company hold funds without asking about its process
Contents
For damaged belongings, keep receipts for the replacements and submit them as you buy. Contents depreciation is often released item by item, within the time frame your policy allows. If contents are covered only at actual cash value, there is nothing more to collect on them, so check your declarations page first.
Related: recoverable depreciation on a roof, mortgage company on the check, and roof supplements.