Will The Insurance Company Depreciate The Value of My Roof?
- 4D Roofing & Restoration
- Feb 15
- 3 min read
A common question Florida Homeowners have when considering whether to file an insurance related roof replacement claim is whether their insurance company is going to depreciate the value of their roof.
It’s a reasonable question… If you have a 15 year old roof, does filing a claim make sense if they’ll take away half of the value?
Actual Cash Value vs. Replacement Cost
Most Florida homeowners insurance policies include Replacement Cost Value (RCV) coverage. That means the insurance carrier agrees to pay what it will cost to replace your damaged roof with a new one of similar kind and quality.
However, they don’t generally pay it all at once.
Insurance companies typically issue a first check based on Actual Cash Value (ACV) and will subtract your deductible from this first payment.
Replacement Cost – Depreciation = Actual Cash Value (ACV)
This depreciated amount reflects the age and condition of your roof at the time of loss compared against the expected lifespan of the roofing system you currrently have at the time it was installed.
The older the roof, the higher that depreciation amount.
What Is Recoverable Depreciation?
Recoverable depreciation is the remaining portion of money the insurance company holds back. They do this until the work is completed.
Once:
The roof is replaced
The final invoice is submitted
The carrier verifies the work (Pictures, Closed Permits, Contractor “Certificate of Completion”, etc)
The insurance company then releases the withheld “depreciation” funds.
That second payment is what brings the total payout up to the full “replacement cost” (minus your deductible).
Example
Let’s say:
Insurance-approved roof Replacement Cost Value (RCV): $20,000
Recoverable Depreciation: $6,000
Deductible: $1,000
Initial ACV payment:
$20,000 (RCV) – $6,000 (Recoverable Depreciation) – $1,000 (Deductible) = $13,000 (First Payment)
After the roof is replaced, the insurance company releases the other $6,000 of recoverable depreciation.
Total paid by insurance:
$19,000
Your responsibility:
$1,000 deductible
A Common Misunderstanding
Many homeowners mistakenly believe they were “underpaid” because the first check seems low.
In reality, the insurance company is simply following the two-payment structure of an RCV policy.
However, if:
You do not complete the work
You do not submit the required documentation
The insurance company does not release the withheld depreciation.
Important Florida Considerations
Legislative changes over the past few years have resulted in some policies being written as ACV-only for roofs over a certain age, or with special endorsements related to how the roof portion of an insurance claim is handled.
If your policy is ACV-only, the depreciated portion would not be recoverable… meaning what you receive initially is all that is paid.
Fortunately, a quick check of your policy documents is all it takes to confirm what kind of coverage you have and doing this before making decisions about filing a claim helps ensure you know what your best and worst case scenarios are.
These policies are still relatively rare as they do not afford homeowners nearly the level of protection that a replacement cost policy provides, but its worth double checking.
Bottom Line
Recoverable depreciation doesn’t hurt you. (It can slow things down a bit though)
It’s simply the insurance company’s way of ensuring repairs are completed before paying the full replacement value.
If you’ve already filed a claim and are unsure how to read your estimate or scope of repairs, have a professional walk you through it before making assumptions. (We’re happy to review this with you. Of course, your insurance agent or even the insurance company’s desk adjuster that was assigned to your claim should also be able to help make sure you understand what is paid and when)
Insurance paperwork can be confusing, but once you understand how recoverable depreciation works, the numbers make a lot more sense.
No matter where you’re at in the process, we can help.
We don’t “take over your claim” but we’re happy to come alongside you in the process, answer any questions you may have and provide feedback based on real world experience with a wide variety of claims, carriers and situations.
More Questions?
For more information on recoverable depreciation, ACV policies and insurance paperwork in general, our FAQ section is a great resource. We’ve answered over 100 common roof related questions there. You can find that section here…
Of course, if you’d like to talk with us about your particular situation, we’re available by phone:
Call us:
407.205.2585
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