Who does recoverable depreciation go to when the house is sold, rented or co-owned?
Short answer. Recoverable depreciation goes to the named insured on the policy, plus any mortgage company listed on it, once the repair or replacement is complete. A contractor receives it directly only if you sign a direction to pay or, where Georgia law allows, an assignment of benefits, and tenants generally have no claim to it because the dwelling coverage belongs to the owner.
The usual case
The check is made out to you and your lender. You then pay your roofer the balance, since the contract price normally equals the insurer's replacement cost. The depreciation is not a bonus for the homeowner; it is the money that finishes paying for the work.
Special situations
- You sold the house before the work was done. The policy and the claim belong to the seller, so recovery depends on the purchase contract and on the work being completed. Put in writing, before closing, who finishes the roof and who collects.
- Co-owners or a divorce. Every named insured is usually on the check and must endorse it.
- Rental house. The owner's policy covers the building. A tenant's renters policy covers the tenant's belongings, not the roof.
- An estate. If the insured dies mid claim, the estate's representative typically steps in to complete it.
When the contractor is paid directly
A direction to pay asks the insurer to include or pay the contractor. An assignment of benefits transfers your right to collect. Georgia law makes it an unfair practice for a contractor to take an assignment of insurance proceeds within one year of a declared natural disaster, so read anything you are asked to sign. See also mortgage company checks.