Recoverable depreciation: What it is and how to get your full payout

Core Concept - The article explains the concept of recoverable depreciation in home insurance claims, detailing how insurers calculate payouts and the steps homeowners must take to receive the full amount they are entitled to after a loss. Group 1: Understanding Recoverable Depreciation - Recoverable depreciation is the portion of a claim payout that insurers withhold until the damaged property is repaired or replaced [1][2] - Insurers typically provide at least two payments after a claim: the actual cash value (ACV) and the recoverable depreciation [2][4] Group 2: Claim Process - The claim process involves several steps: starting the claim, receiving the first payment (ACV), repairing the property, submitting proof of repairs, and receiving the second payment (recoverable depreciation) [5][4] - Homeowners must submit documentation such as receipts and photos to prove repairs were completed to receive the recoverable depreciation [13][19] Group 3: Calculation of Recoverable Depreciation - Insurers calculate recoverable depreciation based on the age and expected lifespan of the damaged item, which affects its ACV [6][7] - An example illustrates that if a computer originally worth $1,600 is damaged, its ACV after depreciation may be around $400, with recoverable depreciation being $1,200 [12][7] Group 4: Policy Considerations - Not all insurance policies offer recoverable depreciation; only replacement cost value (RCV) policies do, while actual cash value (ACV) policies do not [20][10] - Homeowners should review their policies to ensure they include RCV and understand the limits and conditions that may apply to recoverable depreciation [15][10] Group 5: Factors Impacting Recoverable Depreciation - Factors such as coverage limits, the age and type of property, and the nature of the damage can influence the amount of recoverable depreciation [14][16] - Certain items, like older roofs, may not qualify for full RCV, affecting the recoverable depreciation available [17][23]