When you file a homeowners insurance claim, your insurance company may not pay you the full replacement cost of your damaged property right away. Instead, they may apply something called depreciation — a reduction in value based on the age, condition, or expected life of the item. For example, if your 10-year-old roof is damaged in a storm, the insurer may calculate what it was worth just before the damage, not what it costs to replace today.

‍

However, if your policy includes Replacement Cost Value (RCV) coverage, the good news is that this depreciation can often be recovered — which is where the term recoverable depreciation comes from. In most cases, your insurance company will initially pay you the Actual Cash Value (ACV) — that’s the depreciated amount — and then release the rest (the recoverable depreciation) after you complete the repairs and provide proof (like receipts or invoices). This encourages homeowners to actually repair or replace the item, rather than just pocketing the money.

‍

Understanding recoverable depreciation is important because it directly impacts how much money you’ll get — and when you’ll get it. At Happy Adjuster, we help you understand your policy and navigate these steps so you don’t leave any money on the table.

‍