Recoverable Depreciation: Insurance Explained [2025]

If you’re worried about losing value on your home insurance due to depreciation, consider a recoverable depreciation policy. With recoverable depreciation, you can receive the actual cash value on the item as well as the depreciated amount, which totals the item’s original value.

If you’re looking for rates for a recoverable depreciation policy, enter your ZIP code into our free quote tool to determine what you could pay for a new policy.

What is recoverable depreciation?

According to Law Insider, recoverable depreciation is the difference between the actual cash value of your home and the replacement cost. When you have a recoverable depreciation clause on your homeowner’s insurance, you receive the difference between those two amounts as well.

For example, if you had a piece of furniture worth $2,500 that depreciated to $1,500 over a few years, a standard homeowner’s insurance policy would only pay out $1,500 — the actual cash value. However, if you pay extra for recoverable depreciation on your policy, you’ll get the additional $1,000 in the recoverable value (RV) amount.

Receiving the total amount of the item’s cost, instead of the depreciated value, can help you do the following:

• Replace the property
• Pay for more extensive repairs
• Have more options after a disaster

What does less recoverable depreciation mean? For example, suppose your property or furniture has depreciated below its insured value. In that case, the recoverable depreciation will cover the gap between that lesser amount to ensure that you receive the total amount for which the property is insured.

What is recoverable depreciation on a roof claim? If you have a recoverable depreciation policy, the amount by which your roof has depreciated will be covered by your insurance policy. This can help you replace your entire roof with either a similar or better product, which otherwise may not be possible due to lost value.

What is non-recoverable depreciation?

However, there are some limitations in your ability to claim recoverable depreciation amounts. If your insurance company has your policy listed as non-recoverable depreciation, your insurer will only pay the property’s depreciated value or actual cash value.

This can leave you with more out-of-pocket replacement costs. That said, it may cost less because the insurance company won’t be taking on as much risk by covering the extra cost.

Which home insurance policy is best? This is the customer’s decision; however, recoverable depreciation policies will likely cost more for the extra insured value.

Who can benefit from recoverable depreciation?

Not everything will qualify for recoverable depreciation, and it may cost more when your insurance company adds that additional coverage. However, some people may benefit more from a recoverable policy than others.

The following are some examples of situations where people could benefit from recoverable depreciation policies:

• Areas with floods or inclement weather
• Neighborhoods near wildfire hotspots
• Homes that experience a considerable amount of vandalism or theft

While it may cost more to obtain coverage in these areas, you could benefit from having a recoverable depreciation policy. It would be a miserable experience to lose your property and be unable to replace it because your insurance company didn’t pay out enough.

How can I calculate the recoverable depreciation amount?

The recoverable depreciation amount shouldn’t be too difficult to figure out, given that you know what percentage of depreciation your insurer covers. For instance, if your insurance company covers the entire amount of depreciation, you’ll receive the total amount of depreciated and actual value.

If your insurance company offers a different percentage, say 75% of the depreciated value, you need to know the amount your item has depreciated. For example, if it’s lost $500 in value since being insured, you’d receive back 75% of it, equaling $375 on top of the actual cash value.

How do you get paid with recoverable depreciation?

Your insurer will pay out any recoverable depreciation claims to you, the policyholder. So, for example, if you have a contractor on your property being paid by the insurance company, you’ll still be paid the recoverable depreciation amount.

Any extra costs you owe them will need to come from the recoverable depreciation amount, which your insurer will send you. 

While this can add extra steps to the process, it also benefits you. Because you receive the recoverable depreciation amount yourself, you can do the following:

• Spend it however you would prefer
• Pay any bills that will lessen stress
• Replace items and property freely

Since your insurer is paying out the money directly to you, you get the most choice of spending. Merely ensure that all your costs with contractors and other professionals are settled since your insurer will only pay them the depreciated value.

Who keeps the recoverable depreciation check?

The good news is that you can keep the recoverable depreciation check if you’d like. Unless you have any outstanding replacement or repair costs, you can spend it on anything that will make your life easier.

You can do the following with a recoverable depreciation check:

• Replace the furniture or property
• Repair damages to the home
• Pay for alternate lodging

Because the insurer sends the check or funds to you, you’ll have more options regarding how to spend it.

How do I submit a recoverable depreciation claim?

When you submit a regular homeowner’s insurance claim, your agent will first check whether your policy is recoverable or non-recoverable. From there, they’ll calculate these values:

• Actual cash value
• Depreciated value
• Recoverable amount

When your insurer has concluded their computations, they’ll notify you and send a check for the recoverable depreciation amount.

So the short answer is that you’ll have to leave the recoverable depreciation calculations to your insurer. Once you file your claim with the appropriate information, your insurer will do all the work and contact you with their findings.

Are there exceptions to recoverable depreciation?

Your insurance company will ultimately decide what to exclude from the recoverable depreciation amount. Insurers won’t want to pay for something that could have been prevented or was the fault of another organization that could be financially responsible.

Some of the items that might be excluded from your recoverable depreciation policy include some causes of damage and certain fragile items.

If something is damaged frequently, your insurer won’t want to keep paying out every time it happens. Furthermore, some breakable items might only be covered for their actual cash value due to their fragile nature. As with most things, you should discuss any exclusions with your insurer.

Recoverable Depreciation: The Bottom Line

Recoverable depreciation can be a great way to get the total insured amount back on property and furniture damage. If you’re worried about losing out on the value of your property due to depreciation, it’s worth considering how a recoverable depreciation policy can help you retain value.

If you’re researching quotes for recoverable depreciation policies, enter your ZIP code into our free quote tool to discover what you could pay for an insurance policy today.