Recoverable Depreciation and Non-Recoverable Depreciation

Insurance claims aren’t only just a pain to deal with, they can be extremely complicated and confusing to the typical property owner. You’ll see terms like actual cost value, recoverable cost value, depreciation, and many more that might seem intimidating without a public adjuster on your side. So what is recoverable depreciation and what does non-recoverable depreciation mean? Read on to find out.

Before we get into the difference between recoverable depreciation and non-recoverable depreciation, you should know the definition of a few other terms:

Recoverable Cost Value

In order to understand what recoverable depraiction and non-recoverable depreciation are, you need to know recoverable cost value is. RCV for short, recoverable cost value is a cost that an insurance company determines is enough to fix the damages of your property or the contents inside of it. Essentially, it is the cost of what the insurance company believes to be what your items in your home were valued at prior to the damage to your home


Depreciation is the decrease in the value of a piece of property over time.  Alternatively, it is the difference between what you originally paid and what the insurance company believed it to be worth immediately prior to the damage to your home.

Assessing depreciation is an essential aspect of the insurance claim process as the insurance company may not accurately appraise the value of your lost items resulting in a lower amount of recoverable depreciation. 

Actual Cost Value

Actual cost value is the recoverable cost value minus the depreciation of the items or parts of your property.

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What is Recoverable Depreciation?

Recoverable depreciation is the money that you can receive from your insurance claim. For example, let’s say you have a dishwasher in your kitchen that you bought 3 years ago. It was damaged by a fire and cannot be cleaned. To replace it, you would assume that you would just get the money that you paid for it 3 years ago, $600. But due to depreciation, the 3-year-old dishwasher would only be worth $400. Your recoverable depreciation, in this case, would only be $400.


What Does Non-Recoverable Depreciation Mean?

On the other hand, non-recoverable depreciation is the depreciation that you will not be paid in case of a loss. Back to the dishwasher situation, you would not be paid the $200 in depreciation as it is classified as non-recoverable depreciation.

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Is there any way around Non-Recoverable Depreciation?

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After an insurance claim, depending on your policy, you can’t get the non-recoverable depreciation as stated in the policy. Some insurance policies have replacement cost coverage included, or at an additional price, where you would be able get your contents or property paid to you at replacement cost without depreciation.

Before you have a loss at your property, take a look at your policy to see what is and isn’t covered and adjust from there as needed. As public adjusters, we recommend getting replacement cost coverage added to your policy especially if you have a lot of electronics or expensive contents.

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What should I do after an insurance claim?

If you want to maximize your settlement, take the stress out of dealing with your insurance claim, and avoid having to learn about all of these fancy and frustrating insurance terms, we can help. You can hire us to work on your behalf during your insurance claim. We offer free, no strings attached consultations for your property damage.

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We handle your property damage insurance claim so that you don’t have to. Since 2005, we’ve been getting homeowners and business owners the most money for their property damage all while they sit back and relax. The best part of it all? There are no upfront costs or hidden fees, we only get paid when you get paid.

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