Recoverable vs. Non-Recoverable Depreciation
On a replacement-cost-value policy, the [[concept-depreciation|depreciation]] withheld from the initial payout splits into two parts. Recoverable depreciation gets paid back once repairs are completed and documented; non-recoverable depreciation is permanently withheld and never paid, no matter what.
Why it matters
Not all withheld depreciation works the same way: recoverable depreciation is simply delayed pending proof of repair, while non-recoverable depreciation, common on aging roofs or under certain policy endorsements, is gone regardless of whether repairs ever happen, a distinction that changes what a policyholder can actually expect to collect.
On a real project
A $30,000 roof claim has $8,000 in depreciation withheld at the initial payout. The homeowner completes the roof replacement and submits the contractor's invoice within the policy's deadline, and the insurer releases the recoverable portion of that $8,000 as a second check.
Who this matters most to
A Public Adjuster tracks down recoverable depreciation that a homeowner sometimes forgets to claim after finishing repairs, since the insurer generally won't chase the policyholder down to pay it.
Where this goes wrong
A homeowner assumes all $8,000 in depreciation withheld from their roof claim will eventually come back once repairs are complete, the way it did on a past claim years ago. This policy's aging-roof endorsement makes depreciation on roofs over ten years old non-recoverable regardless of completed repairs, so the homeowner submits proof of completion expecting a second check that, under this specific policy, was never coming.