Two checks, not one
On a replacement cost policy, the first payment is usually actual cash value (ACV): replacement cost minus depreciation, minus your deductible. The depreciation is held back and released when you complete the repairs and send proof, within the time your policy allows. On an ACV-only policy, the first check is all there is.
Where depreciation goes wrong
- Labor depreciated along with materials. Whether labor can be depreciated depends on policy language and is a common sticking point.
- Ages and lifespans that don’t fit. A 9-year-old architectural shingle roof shouldn’t be treated like one at the end of its life.
- Depreciation on items that don’t wear out, such as permits, debris removal and code upgrades.
If the depreciation on the carrier’s estimate looks heavy, an estimate review will show which lines drive it. Then put the recovery deadline on your calendar with the claim date tracker.
Questions about this tool
What is a depreciation cap?
Many estimates limit depreciation on any single item to a maximum share of its replacement cost, often 50% to 80%. The calculator lets you pick the cap.
How long do I have to recover the holdback?
It depends on the policy. Some allow 180 days and some a year or more, and some let you ask for more time. Read the Loss Settlement condition.
Can appraisal decide depreciation?
Many appraisal awards state both replacement cost and actual cash value, so the panel can resolve disputed depreciation along with price and scope.