Non-Recoverable Depreciation

The Money That Never Comes Back

Non-recoverable depreciation is depreciation that cannot be claimed back under any circumstances - unlike recoverable depreciation, which the carrier releases after repairs are completed, non-recoverable depreciation is permanently deducted from the claim. Unlike recoverable depreciation, non-recoverable depreciation is gone from the claim forever. There is no second check, no filing deadline to hit, and no supplement that brings it back. On an ACV-only policy, every dollar of depreciation is non-recoverable by definition. On replacement cost policies, carriers can still designate specific components as non-recoverable when they determine an item has exceeded its useful life.

When Carriers Apply It

Know the triggers before you sign a contract. Non-recoverable depreciation shows up in two main scenarios:

Scenario	What Happens	Impact on Contractor
ACV-only policy	All depreciation is non-recoverable	First check is the only check
Aged components (RCV policy)	Carrier marks specific items as non-recoverable	Reduces the replacement cost value ceiling
Cosmetic damage exclusion	Some policies exclude cosmetic hail damage	Functional damage only; dents without granule loss may be denied

Some carriers apply non-recoverable depreciation to roofs over 15 years old regardless of policy type. Others use roof condition endorsements that convert the entire roof coverage to ACV once the roof hits a certain age. These endorsements are becoming more common, especially in hail-prone states.

How to Protect Your Revenue

Check the declarations page before you scope the job. If the homeowner has an ACV-only policy or a cosmetic damage exclusion, the math changes. The deductible still applies, and the depreciation is permanent, which means the gap between the insurance payout and the actual repair cost falls on the homeowner.

Set price expectations during the first conversation. If the ACV check after deductible is $8,000 and your repair costs $14,000, someone is paying that $6,000 difference - and it is not the carrier. Contractors who skip this conversation end up eating the cost or chasing homeowners for payment they cannot collect.

The Supplement Angle

You cannot supplement non-recoverable depreciation into existence. What you can do is challenge the carrier's depreciation schedule. If the adjuster depreciated a 10-year-old architectural shingle at 60% but the manufacturer's warranty runs 30 years, you have grounds to argue the depreciation rate is excessive. The supplement does not recover the non-recoverable designation itself - it challenges whether the depreciation percentage applied was accurate in the first place.