What is Recoverable Depreciation?

At Elite Roofing & Solar, a major part of our job as leading Denver roofers is to educate homeowners about the insurance claim process. One of the most common topics we discuss is recoverable depreciation and how it works. If you’re currently making a homeowner’s insurance claim and you’re not sure how recoverable depreciation will impact you, you’re not alone! Let’s take a closer look at what it means and how it plays a role in the insurance claim process.

Depreciation vs. Recoverable Depreciation

Depreciation is the monetary difference in the current market value for your property versus the replacement value. An example would be an air conditioning unit for which you paid $4,000 just a few years ago. If it is damaged in a wind storm, your insurance company would assess the depreciation of the value of the AC unit based upon its overall condition and wear and tear.

Recoverable depreciation refers to the amount of compensation you recover from your insurance provider after making a claim.  If you carry Replacement Cost Value (RCV) coverage, you can expect to receive payment from your insurance provider in 2 phases. First, you will be compensated for the depreciated value of the damage item(s). Once repaired, you will receive another payment for the remaining recoverable depreciation.

RCV coverage is designed to protect all involved parties. As the homeowner, you can rest assured that you will be properly compensated in the event of damage to your property. This also enables the insurance company to mitigate fraud by incentivizing property owners to complete covered repairs rather than simply pocketing insurance payouts.

What is Nonrecoverable Depreciation

Nonrecoverable depreciation it typically only a concern for property owners who carry an Actual Cash Value (ACV) policy. This type of coverage comes at a lower monthly premium as it only promises to cover the depreciated value of your property at the time it is damaged. There are however instances in which an RVC policy only covers certain items at actual cash value. Not sure what your insurance covers? Check the details of your policy, as ACV and RVC coverage should be clearly defined.

Making a Recoverable Depreciation Claim

If you’re ready to make a recoverable depreciation claim, it’s important to first do your homework. If you’re making a roof damage insurance claim, for example, we encourage you to first contact a reputable roofing company. Why? You may find that your damage is not substantial enough to warrant a claim. On the other hand, if the damage is substantial, an experienced roofing company can help you navigate the claims process to insure you receive adequate RCV compensation.   

Schedule Your Free Inspection with Us Today!

At Elite Roofing & Solar Denver, our trusted experts are here to help you through each step of the roof damage insurance claim process. Allow us to provide a free, no-obligation roofing inspection to help you determine the best course of action when interfacing with your insurance provider. Have questions? No problem! Our staff of highly knowledgeable professionals, including project managers and administrative staff, is here to answer all of them. Allow us to put our extensive experience to work for you and take the guesswork out of your recoverable depreciation insurance claim. Contact us today! 

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While you’re here, we also encourage you to check out these popular posts on roof damage and insurance claims:

How do Hail Damage Insurance Claims Work?

Roof Insurance Claim Process: What to Expect When Filing Your Claim


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