8+ years writing about insurance, taxes, and personal finance
Certified public accountant
Janet applies her experience in personal finance, taxes, and accounting to make complex financial topics accessible. Her byline has appeared on numerous web media.
Becky Helzer is an editor at Insurify. She loves helping writers express their ideas clearly and authentically. With a diverse background in editing everything from curriculum and books to magazine articles and blog posts, she’s worked on topics ranging from home finance, insurance, and cloud computing to the best tools for home improvement.
A proud graduate of Colorado State University with a degree in technical journalism, Becky lives in Fort Collins, CO, with her husband and their two spoiled rescue dogs.
David Marlett is the Managing Director of the Brantley Risk and Insurance Center. He is a professor in the Department of Finance, Banking, and Insurance at Appalachian State University and holds the IIANC Distinguished Professorship. David also serves on the Board of Directors for the Invest program and previously chaired the Loman Advisory Committee for the CPCU Society.
David has taught courses in Risk Management and Insurance for the last 25 years, starting at Florida State University while in the doctoral program. Prior to graduate school, David worked as a commercial lines underwriter for USF&G in Tampa.
He serves as a resource on insurance issues and is a frequent media contributor. He has been quoted by a wide range of outlets, including The New York Times, CNN, Reuters, and NPR.
David has been reviewing articles for Insurify since March 2025.
Updated
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When you file a home insurance claim, you may hear the term “recoverable depreciation.” In simple terms, it’s the part of your claim payout that your insurance company holds back and pays after you repair or replace the damaged items.[1]
Recoverable depreciation is available only if you have replacement cost coverage. It doesn’t apply to actual cash value policies.
Here’s what you should know about recoverable depreciation and what steps you need to take to receive the full amount owed to you.
ACV is what your damaged property was worth just before the loss, factoring in age and wear. RCV is the cost to repair or replace the item at today’s prices using materials of a similar kind and quality.[2]
When you file a claim under a replacement cost policy, your insurance company typically pays the ACV first. It releases the remaining amount later, after you submit proof of repairs or replacement.
Insurers withhold this part of your payout to encourage you to repair or replace your damaged property.
Example of recoverable depreciation
To illustrate how recoverable depreciation works, imagine that a windstorm damages your roof. Replacing the roof will cost $15,000. But because the existing roof is several years old, the adjuster calculates $5,000 in depreciation. Your policy also has a $1,000 deductible.
If you have replacement cost coverage on your policy, the insurance company will initially pay $9,000 (the roof’s depreciated value minus your deductible).
After you replace the roof and submit invoices, the insurance company releases the remaining $5,000 in recoverable depreciation.
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How recoverable depreciation works in a home insurance claim
Here’s how the home insurance claim process works when your policy includes recoverable depreciation:
An adjuster evaluates the damage. Your insurance company sends an adjuster to evaluate the damage to your home or belongings. They’ll estimate the cost to repair the damage or replace the property, and the property’s cash value just before the loss.[3]
Your insurance company makes an initial payout. Your insurance company makes an initial payment based on the damaged property’s actual cash value, withholding the recoverable depreciation. In some cases, the insurance company may pay your contractor directly.
Repair or replace your property. After you receive your initial payment, you can start the repair or replacement process.
Receive the final payment. The insurance company releases the final payment to you or your contractor once the work is complete or you’ve replaced your damaged property.
Insurance companies structure payouts this way so the amount you receive reflects the cost of what you actually repair or replace. You can’t pocket the difference if you decide not to complete the work or replace the damaged items.
Timing and documentation matter, too. Your policy might have set deadlines for completing repairs and requesting the withheld amount. You must also have replacement cost coverage to claim recoverable depreciation.
How to recover depreciation from your insurance company
Recovering depreciation requires follow-through. If you have replacement cost coverage, you typically need to take these steps to get the full benefit:
1. Complete repairs or replacements
Your insurance company won’t release withheld depreciation until you finish the approved work. Use contractors who follow the scope outlined in your claim estimate.
2. Save receipts and invoices
Keep detailed documentation of labor, materials, and payments. Clear records make it easier for your insurance company to verify that your repairs and replacement items match the approved claim.
3. Submit proof to your insurer
Send invoices, receipts, and any required forms promptly. Some insurance companies also request photos or require an inspection or contractor certification before issuing the final payment.[4]
4. Meet claim deadlines
Most policies set limits for completing repairs and requesting recoverable depreciation. If you miss those deadlines, you may forfeit the withheld amount, even if you eventually complete the work.
Recoverable depreciation vs. non-recoverable depreciation
The difference between recoverable and non-recoverable depreciation comes down to the type of policy you have.
Recoverable depreciation applies only to replacement cost policies. Your insurance company pays the actual cash value first, then reimburses the withheld depreciation after you submit proof that you completed the repairs or replaced your damaged items.
Non-recoverable depreciation applies only to actual cash value policies. In this case, the insurance company deducts depreciation from the start, leaving you to pay the remaining repair or replacement costs out of pocket. There’s no second payment waiting for you.
Review your policy’s terms and conditions or talk to your agent to ensure you know what kind of coverage applies before you have a loss.
What types of property have recoverable depreciation?
Recoverable depreciation applies to property covered under a replacement cost policy. It usually includes:
Dwelling coverage: Your home insurance policy’s dwelling coverage pays to repair or replace the structural components of your home and other structures not attached to the house, like a garage, shed, or gazebo.[5] If a covered loss damages your roof, siding, drywall, flooring, cabinets, or built-in systems like plumbing or electrical components, your policy’s dwelling coverage applies.
Personal property coverage: Your policy’s personal property coverage pays to repair or replace personal items, such as furniture, electronics, clothing, sports equipment, and other household items.
Your policy may offer replacement cost coverage for your dwelling and personal property. But some policies treat these categories differently. For example, you might have replacement cost coverage on your dwelling but actual cash value coverage on its contents.
Common reasons recoverable depreciation isn’t paid
Homeowners sometimes expect a second payment but never receive it. Here are some reasons this might happen:
You don’t complete repairs. Insurance companies typically require proof that you completed approved repairs (or replaced your items) before releasing withheld depreciation.
You don’t provide enough documentation. Missing invoices, unclear receipts, or incomplete contractor information can delay or prevent reimbursement.
You miss claim deadlines. Your policy might have a time limit for completing repairs or replacing damaged property and requesting your withheld depreciation payment. Missing those deadlines forfeits recovery.
Your policy has exclusions or limits. Certain items or losses may not qualify for replacement cost coverage under your policy. For example, your policy might cover your roof on an ACV basis, even if you have replacement cost coverage for the rest of your dwelling.
You can avoid unwelcome surprises by reviewing your policy carefully, keeping organized records after a claim, paying attention to deadlines, and communicating regularly with your adjuster.
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How much recoverable depreciation can be
The recoverable depreciation amount depends on several factors, including:
Age of the item: Insurance companies typically apply more depreciation to older items.
Useful life: Every item covered by insurance — from your roof to your appliances — has an expected lifespan. Depreciation reflects how much of that lifespan you’ve already used.
Condition before loss: Well-maintained property depreciates more slowly than items that show visible wear. Keeping detailed records of property repairs and maintenance before a claim can justify a higher ACV.
Depreciation can feel surprising because it reduces your initial payout more than you might expect. If your roof or appliance was halfway through its estimated useful life or had significant wear and tear, the withheld amount may be a large percentage of the total estimated repair costs.
Review your claim estimate line by line to make sure you understand how the adjuster calculated depreciation.
Recoverable depreciation FAQs
You may have more questions about recoverable depreciation during the claims process. Here are answers to a few common homeowner questions.
Is recoverable depreciation the same as a deductible?
No. A deductible is the amount you must pay out of pocket before your insurance coverage kicks in. Recoverable depreciation is an amount the insurance company withholds from your claim reimbursement. If you have replacement cost coverage, your insurer will reimburse the recoverable depreciation after you complete repairs or replace your damaged property.
How long do you have to recover depreciation?
The deadline depends on your state’s laws and policy terms. Some insurance companies require repairs within a set time frame, such as 180 days or six months. Missing that deadline can prevent you from receiving the withheld depreciation.
Do all homeowners insurance policies have recoverable depreciation?
No. Only replacement cost policies include recoverable depreciation. If your policy pays actual cash value only, your insurer will subtract depreciation from your payout, and you won’t receive a second payout after you repair or replace the damaged property.
Can you recover depreciation without making repairs?
In most cases, no. Insurance companies typically require proof that you repaired or replaced the damaged items. Without documentation showing completed work, they usually won’t release the withheld depreciation.
Does recoverable depreciation apply to personal property?
It can, but only if your policy provides replacement cost coverage for personal property. Some policies insure contents at actual cash value unless you add a replacement cost endorsement.[6]
Methodology
Insurify data scientists analyzed rates from more than 180 home insurance companies sourced directly from Insurify’s partner companies and Quadrant Information Services. Rates span all 50 states and Washington, D.C., and quote averages represent the mean price for a given coverage level and geographic area. To ensure data reliability, only insurers meeting minimum quote thresholds were included in the analysis.
Unless otherwise specified, quoted rates reflect the average cost for homeowners with no prior claims and good credit with a home construction year of 1980. The default coverage assumptions include:
Default Coverage Assumptions
Dwelling coverage: $300,000
Deductible: $1,000
Personal property limit: $25,000
Liability limit: $300,000
Additional data points beyond these default values are sourced from Insurify’s proprietary database. Rates are updated monthly.
8+ years writing about insurance, taxes, and personal finance
Certified public accountant
Janet applies her experience in personal finance, taxes, and accounting to make complex financial topics accessible. Her byline has appeared on numerous web media.
Featured in
Janet applies her experience in personal finance, taxes, and accounting to make complex financial topics accessible. Her byline has appeared on numerous web media.
Becky Helzer is an editor at Insurify. She loves helping writers express their ideas clearly and authentically. With a diverse background in editing everything from curriculum and books to magazine articles and blog posts, she’s worked on topics ranging from home finance, insurance, and cloud computing to the best tools for home improvement.
A proud graduate of Colorado State University with a degree in technical journalism, Becky lives in Fort Collins, CO, with her husband and their two spoiled rescue dogs.
David Marlett is the Managing Director of the Brantley Risk and Insurance Center. He is a professor in the Department of Finance, Banking, and Insurance at Appalachian State University and holds the IIANC Distinguished Professorship. David also serves on the Board of Directors for the Invest program and previously chaired the Loman Advisory Committee for the CPCU Society.
David has taught courses in Risk Management and Insurance for the last 25 years, starting at Florida State University while in the doctoral program. Prior to graduate school, David worked as a commercial lines underwriter for USF&G in Tampa.
He serves as a resource on insurance issues and is a frequent media contributor. He has been quoted by a wide range of outlets, including The New York Times, CNN, Reuters, and NPR.
David has been reviewing articles for Insurify since March 2025.
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