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Who Keeps The Recoverable Depreciation Check?
When dealing with insurance claims after storm damage, homeowners often wonder about the [recoverable depreciation check] and who actually keeps it. Understanding this is crucial for anyone managing roof replacement, siding repair, gutters, or other exterior home projects. In this blog, we’ll walk you through how recoverable depreciation works, who legally owns the check, how contractors are involved, and tips for homeowners and commercial property managers to handle insurance claims confidently.
What Is Recoverable Depreciation?
Recoverable depreciation is the portion of your insurance claim representing the difference between your roof or exterior materials’ actual cash value (ACV) and their replacement cost value (RCV).
- Actual Cash Value (ACV): The current value of damaged materials, factoring in age and wear.
- Replacement Cost Value (RCV): The cost to replace the materials with new ones of similar quality.
Insurance companies initially pay the ACV, holding back the recoverable depreciation until proof of repairs is submitted. For roofing, that usually means once a contractor finishes the work and submits invoices, the insurer releases the remaining funds.
How Insurance Payments Work on a Roof Claim
- Inspection and Estimate: An insurance adjuster evaluates roof or exterior damage.
- ACV Payment Issued: The insurer sends the first check based on depreciated material value.
- Proof of Repairs: After hiring a contractor and completing work, invoices are submitted.
- Recoverable Depreciation Released: Remaining funds are released after confirmation of repairs.
This ensures the homeowner only receives the full replacement cost once the repairs are complete.
Caption: Roofer replacing storm-damaged shingles as part of an insurance claim
Alt text: Roofing contractor installing asphalt shingles for storm damage repair
Who Actually Gets the Check?
Legally, the recoverable depreciation check belongs to the homeowner, but in practice, it usually goes to the contractor.
- Homeowner Temporarily Holds It: Sometimes the homeowner receives the check first.
- Contractor Payment: Most homeowners endorse the check to the contractor to pay the balance.
- Mortgage Company Involvement: If listed on the policy, the check may require lender endorsement.
Tip: Always review your insurance and contract terms to understand who is authorized to receive payment.
Internal links that naturally fit here:
Common Misunderstandings
Some homeowners assume they can keep the recoverable depreciation check as cash. This is not advisable because:
- Insurance policies require the money be used to repair or replace the damaged property.
- Pocketing the funds without completing repairs may be considered insurance fraud.
- If the job costs less than the total payout, insurers may adjust the final amount.
Beyond Roofing – Other Home Exterior Claims
The same ACV + recoverable depreciation process applies to other exterior home projects:
- Siding Damage: Hail or wind damage triggers similar insurance payments.
- Gutters: Storm-damaged gutters follow the same process.
- Windows: Replacement costs are handled with recoverable depreciation.
Additional internal links for context:
Tips for Managing Recoverable Depreciation
- Keep Paperwork: Retain all insurance forms, ACV checks, and invoices.
- Communicate with Contractors: Make sure they know to expect the recoverable depreciation check.
- Understand Your Deductible: Know your out-of-pocket responsibility.
- Request Supplements: Submit documentation if extra repairs or code upgrades arise.
Commercial vs Residential Claims
- Commercial Properties: Larger roofs and multi-unit buildings may require multiple endorsements and more complex contracts.
- Residential Properties: Usually simpler but still require proof of repairs.
Internal link to guide commercial property owners:
- [commercial flat roof maintenance]
Final Thoughts
- The recoverable depreciation check belongs to the homeowner but is typically used to pay the contractor.
- Proper documentation and communication with your insurer and contractor ensure smooth processing.
- The same principles apply to roofing, siding, gutters, and windows.
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