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. Let’s learn about recoverable depreciation and non-recoverable depreciation.
Recoverable Cost Value
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.
Actual Cost Value
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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 is Non-Recoverable Depreciation?
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Is there any way around this?
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.