A lot of homeowners and business owners that Advocate Claims Public Adjusters come across wonder how to recover depreciation from an insurance claim. The very first thing that licensed public adjusters will tell you to do is check whether or not you even have recoverable depreciation. The majority of the time, a business or homeowner will have recoverable depreciation; however, sometimes it is non-recoverable because the policy owner has an Actual Cash Value Policy. Other times depreciation may not be recoverable are if repairs and replacement were not completed before a designated deadline.
Through hiring a licensed public adjuster in South Florida, you can verify if your depreciation is recoverable during your insurance adjustment or on the insurance declaration page or policy. If your depreciation is recoverable, the Replacement Cost Value of the repairs must be spent, and copies of invoices must be sent to the insurance company in order to indicate that the repairs and/or replacement has been completed. By doing this, it allows them to then release the recoverable depreciation to you.
In order to determine how the figures are calculated, Advocate Claims has an example for how recoverable depreciation is computed:
A home is insured for $100,000 and has completely damaged its roof due to a tornado. The cost to replace the roof (Replacement Cost Value) is $10,000. Let’s say the roof is 20 years old and the policy owner’s deductible is $1,000.
The insurance adjuster is going to depreciate the roof based on age, so let’s say 20%, making the Actual Cash Value of the roof $10,000 – $2,000 depreciation = $8,000
The recoverable depreciation would be the Replacement Cost Value – Actual Cash Value = $7,000 after the deductible is applied.
The insurance company will make a payment to the policy owner for $7,000 actual cash value towards replacing the roof.
After the roof has been replaced for the full Replacement Cost Value of $10,000 and the insurance company receives the invoice, they will release the recoverable depreciation of $2,000 to be reimbursed to you.
If you are unsure of the process of filing a residential or commercial property insurance claim and the calculations made during the settlement and repair/replacement cost process, contact Steven Venook at Advocate Claims, at 954-369-0573.