Having the proper residential and commercial home insurance policy coverage can make a difference between paying out of pocket and having your provider cover damages. You should know all your options and what claims you might be entitled to when it comes to your property. You’ll get a better payout when you understand what your policy covers in the event of damage, theft, weather destruction or other loss.
Public Insurance Adjusters will help you make a claim on damage to recover depreciation. Maximizing your payout is important for replacing your belongings and fixing the damage in your home or business without depleting your own financial resources. Learn more about how to recover depreciation on insurance claims.
What Is Recoverable Depreciation?
Depreciation is the decrease in the value of your property since you purchased it. It’s the difference between the amount you paid for your home and what your insurance company believes it to be worth prior to damage or destruction. Recoverable depreciation is the amount of this depreciation that you can recover from your insurance company when you make a claim. It’s the gap between your insured belongings’ actual cash value (ACV) and the replacement cost value (RCV).
You’ll generally be able to recoup the depreciated value of your home or business after destruction or damage. For instance, a recoverable depreciation clause in your insurance policy lets you claim the difference for a reimbursement. Recoverable depreciation accounts for the deterioration of your insured possessions due to normal wear and tear or weather and storm damage. However, recoverable depreciation often depends on the type of homeowners insurance policy and coverage you have.
There is also non-recoverable depreciation. The significant difference is that non-recoverable depreciation will not offer you the value of your damaged items or property. You’ll most likely have to pay for it out of pocket or settle only for what your claim covers after your deductible. With recoverable depreciation in your policy, your reimbursement will generally be higher.
These claims are usually reimbursed in two separate parts:
- The first part is a check for the actual cash value or depreciated value of your home or business or items that have been damaged.
- The second part is a check sent after repairs or replacements are complete, covering the recoverable depreciation amount.
Insurance companies split the replacement cost claims into parts to avoid fraud and excessive payouts. If you use the first check for unrelated purposes, your insurance company will not issue the second check. This method helps ensure that recipients use the money received for its intended purposes, such as repairing a roof or replacing a stolen computer. It also prevents insurers from overpaying if you replace an item or repair damage at a lower cost.
How to Calculate Recoverable Depreciation
Recoverable depreciation is typically calculated with an at-home visit to assess your property’s damage. Your insurance company may check certain areas of your home or possessions to provide an accurate estimation of value. This value — minus your deductible payment — is the amount that your insurance company will cover, plus the cost of a replacement, depending on your policy.
Your ACV or RCV insurance policy can affect the outcome of your insurance claim on property damage. With ACV insurance, you’ll receive the amount settled between you and your insurance company — minus your depreciation. Any additional expenses for repairs or replacements will be at your own cost. With an RCV policy, you will usually get the settlement checks mentioned above that offer more coverage for the property damage.
Calculating the recoverable depreciation is unique to every individual but usually relies on a common estimation. For instance, you might purchase a home computer for $2,000 with a useful lifespan of five years. Insurance companies generally base the recoverable depreciation estimate with a calculation of the total cost divided by the estimated lifespan, so for each year that you own the computer, its value will depreciate by $400. If your insurance policy has a recoverable depreciation cost, you can claim the depreciation of your home computer in addition to its original ACV.
If your policy includes a deductible, it will simply be subtracted from the total amount of money you receive. This calculation is often applied to any possession as long as your homeowner’s insurance covers it. However, the calculations and estimates may change depending on the nature of the damage and your unique policy.
Before making a claim with your insurance policy over damage, destruction or theft on your residential or commercial property, it’s always best to consult with experts. The professional adjusters at Performance Adjusting can help calculate recoverable deprecation and ensure you’re getting the settlement you’re entitled to.
How to Recover Depreciation on a Home Insurance Claim
If you’ve experienced property damage and need to recover depreciation on a home insurance claim, there are a few common steps to filing a claim. Before you engage in this process, it’s worth hiring a Public Insurance Adjuster to document and negotiate the claim. You can consult with an experienced professional to get everything done properly and efficiently.
A Public Insurance Adjuster can also assess how depreciation affects your policy, determining if a claim is worth filing in the first place to save you time and money. Checking with an insurance adjuster before making a claim can protect you from unnecessary hassle, paperwork and future premium increases.
Performance Adjusting has a team of trained adjusters and estimators who use advanced technology and techniques to accurately assess your property damage. It’s a good idea to be proactive and confirm whether depreciation is recoverable or non-recoverable in your policy. You should also confirm which clause requirements could affect your depreciation to avoid any surprises or unexpected costs.
Here is the usual process for recovering depreciation on a home insurance claim:
- After loss or damage occurs, call and initiate the claim process with your insurance provider.
- A claims adjuster will visit your home or business and assess the damage and ACV, RCV and depreciation.
- If your damaged or stolen property, structure or items are covered under your policy, then you’ll receive a first check for the estimated value.
- Get the damaged items or property repaired or replaced, and keep all receipts to show your home insurance provider that you’ve used the claim money as intended.
- You’ll then receive a second check for the recoverable depreciation. Your deductible may be subtracted from this amount. If you replace the item(s) at a lesser cost, the second check may have a lower payout.
- Be sure to submit all necessary documentation, receipts or other information if your insurance provider has a set deadline for the claim.
Check with a public adjuster about any questions you have regarding your insurance policy to make the best-informed decisions.
Performance Adjusting Is Your Insurance Claim Solution
Communicating and handling a claim with your insurance company can be stressful. The professionals at Performance Adjusting understand this process and can do the heavy lifting for you and maximize your insurance claim payment. Our adjusting team has your best interests in mind because we work for you — not the insurance company. We can help with new or existing claims, even if they’ve already been filed.
At Performance Adjusting, our Public Insurance Adjusters have expertise in a wide range of services. We’ll allow you to check the status of your claim to keep you involved in the process. Contact us before calling your insurance company so we can negotiate your settlement for you. Call today at 401-753-8818 to schedule a free consultation or visit our website to fill out our contact form and get more information.