What is recoverable depreciation on my home insurance claim estimate?

Recoverable Depreciation is the amount you can recover from the insurance company once you prove to them you have replaced the damaged item

Here is an example of a 15,000 roof claim

It will cost you $15,000 to replace your roof but the insurance does not want to give you $15,000 and hope you replace your roof

They want you to prove to them you replaced your roof

So they will pay you actual cash value (depreciation) on the roof and show recoverable depreciation amount on the estimate

That amount will be delivered to you in a second claim check once you show proof you replaced your roof

 

All property policies are subject to recoverable depreciation.

 

 

CAN THE INSURANCE COMPANY DO THIS?

Yes.

If you have a Replacement Cost Home Insurance Policy, in the policy contract the insurance company has the right to withhold funds until proof of replacement to damaged items have been repaired.

 

WHAT IF I DON’T REPLACE THE ROOF AND JUST KEEP THE MONEY?

All future roof claims and resulting water intrusion will be denied.

Once you repair/replace the roof,  the insurance company will mail you the withheld funds or recoverable depreciation amount.

 

WHAT DO I DO NEXT?

Since you replaced your roof,  you may be eligible for a new roof credit.

Most insurance companies that have been writing home insurance policies since Hurricane Katrina, will allow a new roof discount.

example)

You purchased a policy in 2006 and your roof was replaced in 2006.

Recently you had a total loss on your roof and you had to replace the roof in 2016.

You now are eligible for a New Roof 2016 credit.

With some companies this could be up to a 15% discount.

 

WHAT ABOUT DEPRECIATION ON MY PERSONAL PROPERTY OR CONTENTS COVERAGE?

Some policies are subject to removal of replacement cost on your contents, so check your policy to make sure you have replacement cost on your contents.

If you do and you received a claim check with a deduction for depreciation, the same issue applies to your contents.

The insurance company is going to make sure you actually replace your property.

They don’t want to give you a full check to replace your sofa and you decide to get it cleaned and not replace.

You will receive a reduced check amount and once you show a receipt, you will get the remaining funds.

 

All insurance companies handle property claims this way.

 

Yes you have a replacement cost policy and you will eventually get the full replacement cost, you just have to show receipts you replaced the damaged items.

Once again you can’t get paid twice for damaged property in a claim.

If you get paid for damaged property and you don’t replace, this will be considered prior damage property and not be subject for any future claim payment so it is important if an insurance company issues payment for a damaged item, you either replace or you provide photos that your repaired the damage so it will not be excluded on a future claim.

 

WHAT YOU NEED TO DO.

If you replaced your roof after a claim, show your insurance agent a receipt for the new roof and send them a picture.

This will generate the remaining funds on the claim estimate to you.

Ask your agent to request the new roof discount with your current insurance company.

If your current Home Insurance company does not allow a new roof discount, you can contact us and we represent preferred home insurance companies that will offer multiple discounts including a replacement roof discount.

If you sustained damaged property in a claim such as your personal property inside the house, send your agent the receipts and pictures so you will obtain the remaining funds and future property claims will be included.

 

If you have a difficult claims experience or just received no help from your current agent on your most recent claim, we can offer you a better experience.

If you want to get a Home Insurance Quote proposal with all the available discounts you should be getting,

give us a call or complete our quick form to get started.

 

WHAT IF I JUST KEEP THE MONEY FROM THE CLAIM AND DON’T REPLACE OR REPAIR THE DAMAGED ITEMS?

 

Yes you can keep the money, but the insurance company will consider the damage “unrepaired” and if you have another claim,  you will not be paid for repair or replace of the item again.

example)

Hail Storm hits your area in June and you receive a roof replacement estimate of $8,000 with $1500 withheld from the claim check for recoverable depreciation.

You decide to keep the $6500 and not replace your roof.  

A few months later a hurricane hits your area and everyone is getting a new roof.

You sustain significant roof damage to your house. The company will not pay you anything for your roof because the photographs indicate the roof has not been replaced.  

You can not be paid twice for the same damaged item unless you can prove you repaired or replaced the item.  

You also run the risk of denial of any resulting damage from the roof such as water intrusion because you failed to replace the roof.  

 

WHAT IF I KEEP THE MONEY, CANCEL THE HOME INSURANCE POLICY AND GO WITH ANOTHER COMPANY?

 

You can but home insurance companies today will run a claim history report CLUE REPORT and they will perform an inspection of your house upon binding the new policy.

In the above example, if the new insurance company inspects the roof and determines the roof has existing hail damage, the new insurance company will either cancel the policy or give 30 days to replace the roof in most cases.

Once again existing damage will result in a denial or reduction of any future claim payments.

Some Louisiana Homeowners have decided to keep the claim payment check and not repair the roof damage after a hail storm.

If the CLUE report lists you receiving $12,000 on a hail claim and you never replaced your roof, the company could deny all future roof claims. 

If you decide to do this, you need to be aware of the consequences on future claim payments and future damage to your home.