Learn how to recover depreciation holdback on replacement cost policies. Understand deadlines, requirements, and maximization strategies.
Get Claim Command Pro →If you have replacement cost coverage, your initial settlement includes depreciation deductions. You can recover this depreciation after completing repairs, but many homeowners don't understand the process or miss critical deadlines, forfeiting thousands of dollars.
Replacement cost policies pay the full cost to replace damaged items with new items of like kind and quality. However, insurance companies don't pay the full amount upfront. They pay actual cash value (replacement cost minus depreciation) initially, then pay the depreciation holdback after you complete repairs.
Insurance companies withhold depreciation to ensure you actually complete repairs. If they paid full replacement cost upfront and you didn't repair, they'd be overpaying. The holdback ensures you use the money for its intended purpose.
Homeowners often don't realize they can recover depreciation, miss the recovery deadline, fail to submit proper documentation, or don't complete repairs within the required timeframe. Each mistake costs thousands in forfeited depreciation.
Most policies require you to complete repairs and submit depreciation recovery claims within 180-365 days of the initial settlement. Miss this deadline and you forfeit the depreciation permanently.
Repairs must be completed to recover depreciation
Submit invoices, receipts, and proof of payment
File within the policy-specified timeframe
Repairs must match or exceed original materials
Follow these steps to ensure you recover all depreciation you're entitled to.
Get tools and guidance to track deadlines and maximize depreciation recovery.
Get Claim Command ProYou can recover the full amount of depreciation that was withheld from your initial settlement. This is typically shown on your settlement statement as "recoverable depreciation."
Request an extension in writing before the deadline. Explain why you need more time and provide evidence of progress. Extensions are sometimes granted but not guaranteed.
Policies vary. Some allow DIY repairs; others require licensed contractors. Check your policy and get written confirmation from your insurer.
You typically only recover depreciation up to the actual amount spent on repairs. If repairs cost less than estimated, your depreciation recovery will be reduced proportionally.
You forfeit the depreciation permanently. This is why tracking deadlines is critical—missing the deadline can cost you thousands of dollars.