Recoverable depreciation: the money the carrier is holding back

You get an estimate for $80,000 and a cheque for $52,000. Nothing has gone wrong. The difference is usually your deductible plus depreciation, and most of that depreciation is money you can still get.

The two numbers on your estimate

A replacement cost policy works in two steps. Replacement cost value (RCV) is what it costs to replace the damaged thing new. Actual cash value (ACV) is that figure reduced for the age and wear of what was actually there. A fifteen-year-old roof is not worth a new roof, so the carrier depreciates it.

The first payment is normally ACV, minus your deductible. The held-back amount is the depreciation.

Recoverable versus non-recoverable

If your policy is replacement cost, the depreciation is usually recoverable: once you have actually done the work and can prove it, the carrier pays the balance. If your policy is actual cash value only, it is not — the ACV payment is the whole entitlement. Check which you have before you plan the budget, because the difference here is often tens of thousands of dollars.

How to actually recover it

1. Do the work described in the scope. Not different work — the work on the lines you are claiming against.
2. Keep the invoices, and make sure they describe the work in terms that map onto the scope lines.
3. Photograph the completed work. Before-and-after pairs of the same view are the most persuasive format there is.
4. Send the carrier a completion packet: the invoices, the photographs, and a covering summary that says which scope lines each invoice satisfies.
5. Ask explicitly for the release of recoverable depreciation. It is often not automatic.

The reason it goes unclaimed

Rarely because people do not know about it. Usually because by the time the work is finished — a year later, across six trades, forty invoices and two thousand photographs — assembling the packet is a genuinely large job, and there is always something more urgent.

The fix is to build the packet as you go rather than at the end. If every invoice is filed against a category and every photograph is attached to the item it shows, the completion packet is an export rather than a project. That is exactly what the claim file does — one button, receipts matched, photographs included.