Recoverable vs. Non-Recoverable Depreciation: The Money You Might Be Leaving on the Table

If your last claim check felt lighter than the estimate suggested, the culprit was probably depreciation — and the important follow-up question is whether that withheld amount is gone for good, or whether it's sitting there waiting for you to claim it. That depends entirely on whether your policy treats the depreciation as recoverable or non-recoverable.

Non-recoverable depreciation

This is depreciation you don't get back, under any circumstances. If your policy — or a specific coverage within it, like personal property or certain structures — has non-recoverable depreciation, the ACV payment (replacement cost minus depreciation) is the final word on that portion of the claim, whether or not you ever complete repairs.

Recoverable depreciation

This is the more common arrangement on standard replacement-cost dwelling policies, and it works differently: the depreciation withheld from the first check isn't lost, it's held back until you complete the repair or replacement and submit proof — invoices, receipts, contractor documentation. Once the carrier confirms the work was done, it releases the depreciation holdback, bringing your total payment up to the full RCV.

Why this distinction gets missed

The two types of depreciation often exist side by side in the same claim. Your roof and siding might carry recoverable depreciation, while damaged personal contents in the same loss carry non-recoverable depreciation, or vice versa — the specific coverage form and endorsement language controls it, and that's not always spelled out clearly in the settlement letter.

The bigger issue is timing: recoverable depreciation isn't paid automatically. Most policies attach a deadline — commonly 180 days from either the date of loss or the date of the initial ACV payment, though this varies by carrier and policy — to complete the work and submit the request. Miss that window, and money that was legitimately recoverable can become permanently forfeited, not because the insurer denied it, but because no one asked for it in time.

What to do with a settlement letter that mentions depreciation

Confirm, in writing, whether the withheld amount is recoverable or non-recoverable. If it's recoverable, get the exact deadline and what documentation the carrier requires to release it — usually paid invoices or a signed contractor completion certificate. Keep every receipt from the repair, even ones that seem minor, since the carrier will often ask for line-item support before releasing the holdback.

This step is one of the most common ways policyholders unintentionally leave money unclaimed — not because the insurer denied it, but because nobody followed up before the deadline passed. If you've completed repairs on a past claim and never circled back to request the depreciation holdback, it's worth checking whether that window is still open.

Gabriel Antoine is a licensed Public Adjuster in New York (PA-1819103), New Jersey (3002844026), and Indiana (Certificate of Authority No. 4242786). Request a consultation.