What is Recoverable Depreciation?

picture of person writing a check for recoverable depreciation

Recoverable depreciation is the depreciated value amount that the insurance company is holding back from your payout, but will pay you in the future. Read on to learn how to claim it!

To further your understanding of what is recoverable depreciation, please refer to the blog post on how to read an appraisal award letter.  It will help you understand the two figures ACV (actual cash value, or depreciated value) and RCV (replacement cost value, the cost to replace the item today).  

Looking at the picture of the appraisal award letter, you will see the ACV is $54,808.46.    

The amount under the RCV is $64,012.84  (taking out the deducible).

So, $9,204.38 is being depreciated or “held back.” This number is calculated by subtracting the RCV from the ACV.

This amount $9,204.38 is what the insurance company will tell you is recoverable depreciation.  This amount is being held back from payment.

So, if it is recoverable, how to you claim it, or recover it?

By the way, the insurance company does this to save money.  BUT, they also do it because they are trying to prevent you from PROFITING on your insurance claim.  If you did profit, you would be violating the principle of indemnity.  Holding back your money is a method which works pretty well for the insurance companies.

In order to claim your recoverable depreciation you will need to spend over the ACV amount of $54,808.46.  For every dollar over that ACV amount, you will be entitled to be reimbursed that dollar.  And, this goes up to the RCV amount, which in the case of the example is $64,012.84 (RCV). 

Once you spend the full amount of RCV, you will get all the recoverable depreciation back.  You simply have to send in your invoices or proof of payment.

You don't have to struggle with this. Call FAPA at 954.659.8333. FAPA will help you.