Recoverable depreciation

What it means

On a replacement cost policy, the insurer usually pays in two steps. The first payment is actual cash value: replacement cost minus depreciation. The depreciation it held back is “recoverable” because you can get it once you repair or replace.

The standard ISO homeowners form (HO 00 03) says the insurer will pay no more than actual cash value until actual repair or replacement is complete, with an exception for small losses. The same form lets you take an actual cash value payment first and claim the rest later, if you notify the insurer of your intent within 180 days after the date of loss. In Florida, the insurer must pay remaining amounts as work is performed and expenses are incurred (§627.7011).

Why it matters to your claim

Recoverable depreciation is often thousands of dollars, and it is easy to leave on the table. United Policyholders says insurers do not volunteer it and that you usually have to replace the items and send receipts with a demand for the balance. Keep every invoice and receipt, note any deadline in your policy, and ask in writing for the held-back amount once work is done. Non-recoverable depreciation, on an actual cash value policy, is gone for good. Check your declarations page to see which applies. See our guide to the water damage claim process.