Recoverable Depreciation
Recoverable depreciation is the portion of the insurance claim that the carrier withholds until repairs are completed and documented. On a replacement cost policy, recoverable depreciation is released after the homeowner submits invoices and photos of completed work within the policy's recovery deadline.
The Second Check That Makes the Job Profitable
Recoverable depreciation is the portion of an insurance claim the carrier withholds until the policyholder completes repairs and submits documentation, and this second payment is typically the difference between a profitable job and one that barely breaks even. On a replacement cost policy, the carrier pays the actual cash value first (replacement cost minus depreciation), then releases the depreciation holdback after the homeowner submits invoices and photos of completed work.
How the Two-Check System Works
On a $20,000 roof claim with $6,000 in depreciation and a $2,000 deductible:
| Payment | Amount | When |
|---|---|---|
| First check (ACV minus deductible) | $12,000 | After claim approval |
| Second check (recoverable depreciation) | $6,000 | After repairs completed and documented |
| Deductible (homeowner responsibility) | $2,000 | Paid to contractor |
| Total RCV | $20,000 |
The contractor needs that $6,000 second check to make the numbers work. If the homeowner pockets the first check and never completes repairs, the depreciation is never released, and the contractor who already signed the job is stuck.
The Deadline That Kills Claims
Miss the filing deadline and the homeowner forfeits the recoverable depreciation permanently. Deadlines vary by state and policy - typically 180 days to 2 years from the date of loss or the date of the initial payment. Some carriers bury the deadline in the policy language, and homeowners rarely know it exists.
As the contractor, track this deadline yourself. Do not rely on the homeowner to remember. Calendar it the day you sign the contract, and build your project timeline to complete repairs well before the deadline hits. A job that drags on for 18 months on a policy with a 12-month recovery window means that $6,000 in depreciation disappears.
How to Trigger the Release
Submit clean documentation the carrier cannot reject. The carrier typically requires invoices showing the work was completed, photos of the finished repairs matching the scope of work, and sometimes a signed completion certificate. Sloppy documentation - blurry photos, invoices that do not match line items, missing dates - gives the carrier an excuse to delay or deny the release.
Some carriers release recoverable depreciation in stages as work is completed. Others require the entire job to be finished before releasing any depreciation. Know which process your carrier uses before you start work.
The Difference from Non-Recoverable Depreciation
Non-recoverable depreciation is gone forever - there is no second check. Recoverable depreciation exists only on replacement cost policies. On ACV-only policies, all depreciation is non-recoverable by definition. Check the policy limits and coverage type on the dec page before committing to any job.
Further reading
Frequently asked questions
Complete the repairs and submit documentation (invoices, photos of completed work) to the carrier. The insurer then releases the held-back depreciation. Missing the filing deadline - often 180 days to 2 years depending on the state and policy - means the homeowner forfeits that money permanently.
The homeowner forfeits the recoverable depreciation permanently. Deadlines vary by state and policy, typically ranging from 180 days to 2 years. This is money that cannot be recovered once the deadline passes.
No credit card required