Recoverable vs. Non-Recoverable Depreciation: Where Your Money Goes
Two homeowners each lose $15,000 in cabinets depreciated at 20%. Both receive an initial check for $12,000. One gets the remaining $3,000 back after repairs. The other never sees it. The difference is one word on their policy: recoverable.
Read more → from the replacement cost. Whether you can recover that depreciation depends on your policy type. With an RCV policy, the depreciation is recoverable after you complete repairs. With an ACV policy, it's gone. Some RCV policies also make depreciation non-recoverable if you miss the deadline. That deadline can sneak up on you faster than you think.
How depreciation hits your check
Your insurer prices the repair at full Replacement Cost Value (RCV). Then they subtract depreciation based on the age, wear, and condition of the damaged items. The result is the Actual Cash Value (ACV).
On $15,000 in cabinets depreciated 20%, the ACV is $12,000. The $3,000 gap is the depreciation amount. What happens to that $3,000 depends entirely on your policy type.
Recoverable: you get it back
If you have an RCV policy, the depreciation is recoverable. The insurer pays the ACV amount upfront. After you complete repairs and submit receipts, they release the depreciation as a second payment.
Your total payout equals the full replacement cost. The process works item by item. Every depreciated line item in your estimate has a recoverable amount.
Add them up across a $50,000 claim and the holdback can be $5,000-$15,000. That's money sitting there waiting for you.
- Replacement cost of cabinets: $15,000
- Depreciation (20% for age): -$3,000
- Initial ACV payment: $12,000
- After repairs + receipts submitted: +$3,000 holdback released
- Total received: $15,000 (full replacement cost)
Non-recoverable: it is gone
If you have an ACV policy, the depreciation is permanent. You receive the ACV amount and that's it. No second payment.
No holdback. The $3,000 in our example simply stays with the insurer. You cover the gap out of pocket if you want the same quality repair.
Some RCV policies also list specific items as non-recoverable, and some convert recoverable depreciation to non-recoverable if you miss the filing deadline.
The deadline that changes everything
RCV policies set a deadline for recovering depreciation. Typically 180 days to one year from the initial payment date. Miss it, and the recoverable depreciation becomes non-recoverable permanently.
You lose the money. Repair delays are the biggest risk here: contractor backlogs, material backorders, slow supplementSupplements: Getting Paid for What the Adjuster Could Not SeeA supplement adds items to your existing insurance estimate after the original scope was written. Hidden damage behind walls, code upgrades flagged...
Read more → approvals. All of them eat into your timeline.
Track the deadline from day one. Start repairs as soon as possible. Submit recovery documentation as each phase of repair finishes rather than waiting until everything is done.
If you're running close, request an extension in writing before the deadline passes.
Quick-check your estimate
- Check your declarations page: RCV means recoverable, ACV means non-recoverable
- If RCV, find the recovery deadline in your policy conditions
- Begin repairs quickly to give yourself maximum time
- Keep all receipts and invoices for the recovery submission
- Submit recovery documentation in stages as repairs are completed
- Request a written extension if you are approaching the deadline
See how this applies to your property
Upload photos of your damage and get a detailed analysis showing exactly where your estimate may fall short.