You filed your insurance claim, the adjuster approved the repairs, and you received a check — but it’s for less than the full estimate. What happened? In most cases, your insurance company withheld the recoverable depreciation, and that missing money is yours to claim once the repairs are complete.
Recoverable depreciation is one of the most misunderstood parts of the insurance claims process. Many homeowners don’t realize they’re entitled to additional money after repairs, and some never collect it — leaving thousands of dollars on the table.
How Insurance Calculates Your Payout
When your insurance company approves a claim, they calculate two values:
Replacement Cost Value (RCV) — The full cost to repair or replace the damaged property with new, equivalent materials at today’s prices. If your 15-year-old roof needs replacement, the RCV is what a brand-new roof costs right now.
Actual Cash Value (ACV) — The replacement cost minus depreciation. Depreciation accounts for the age, wear, and remaining useful life of the damaged materials. That 15-year-old roof has been depreciating since installation, so its ACV is significantly less than its RCV.
The difference between RCV and ACV is the depreciation. And on most homeowners policies in Washington State, that depreciation is recoverable — meaning you get it back after you complete the repairs.
A Real-World Example
Let’s say a windstorm damages your roof and the insurance estimate shows:
Replacement Cost Value (RCV): $18,000 (cost of a new roof)
Depreciation: -$4,500 (your roof was 12 years into a 30-year lifespan)
Actual Cash Value (ACV): $13,500
Your Deductible: -$1,000
Initial Check: $12,500
Your insurance company sends you $12,500 initially. But the full approved cost is $18,000. That missing $4,500 in depreciation isn’t gone — it’s being held until you prove the repairs are completed.
How to Recover Your Depreciation
After your contractor completes the repairs, they submit completion documentation to your insurance company — typically a final invoice, photos of completed work, and proof that the repairs match the approved scope. Your insurer then releases the depreciation holdback.
In our example, after the roof is replaced and documentation is submitted, you’d receive an additional $4,500 — bringing your total claim payout to $17,000 ($18,000 RCV minus your $1,000 deductible).
This process is sometimes called “collecting the depreciation holdback” or “recovering the supplement.” Whatever you call it, it’s money you’re entitled to under your policy — and your contractor should handle the submission for you.
Important Rules About Recoverable Depreciation
You must complete the repairs. The depreciation is only released after your insurance company receives proof that the work was done. If you cash the initial ACV check and never make repairs, you forfeit the recoverable depreciation.
There’s usually a time limit. Most policies require you to complete repairs and submit for depreciation recovery within 180 days to one year from the date of the initial payment. Check your specific policy — missing this deadline means losing the money.
Repairs must match the approved scope. Your insurer releases depreciation based on the work described in the original estimate. If you do less work than what was approved, you may only recover a proportional amount.
Not all policies have recoverable depreciation. Some policies — particularly older or lower-cost policies — pay only ACV with no option to recover depreciation. These are called “Actual Cash Value” policies. Most standard homeowners policies in Washington State are “Replacement Cost Value” policies with recoverable depreciation, but check your declarations page to confirm.
Why This Matters for Your Choice of Contractor
Here’s where the choice of contractor directly affects your bottom line. An experienced insurance restoration contractor knows about recoverable depreciation and builds it into their process. They complete the repairs to match the approved scope, submit proper completion documentation to your insurer, and follow up until the depreciation is released.
A contractor who doesn’t understand insurance may complete the repairs and consider the job done — never submitting the paperwork that triggers the depreciation release. Or they may not match the approved scope closely enough for the insurer to release the full amount. Either way, you lose money.
What If Your Claim Includes Supplements?
If your contractor filed supplements (requests for additional coverage for items the original estimate missed), the same depreciation rules apply to the supplemented items. The insurer calculates depreciation on the total approved amount — original estimate plus supplements — and holds back the depreciation on all of it until repairs are complete.
This is another reason supplements matter: they increase your total RCV, which increases your total recoverable depreciation. A contractor who files thorough supplements doesn’t just get more work approved — they increase the total depreciation you’re entitled to recover.
Don’t Leave Money on the Table
Recoverable depreciation can represent 20-40% of your total claim value. On a $20,000 claim, that’s $4,000 to $8,000 that belongs to you — but only if you complete the repairs and submit the right documentation within the required timeframe.
At Prolific Design-Build and Restoration, depreciation recovery is built into every project we manage. We complete repairs to match the approved scope, submit completion documentation to your insurer, and follow up until every dollar of recoverable depreciation is released. It’s part of what we mean when we say we handle your insurance claim from A to Z.
Questions about your insurance claim payout? Call (425) 800-4775 for a free consultation. We’ll review your estimate, explain your depreciation, and handle the entire claims and restoration process. Serving all of King County, WA.