When you file a home insurance claim, your insurer may hold back part of the payout as recoverable depreciation. This amount is released once you replace or repair the damaged property. Understanding this process can help ensure you receive the full amount you’re entitled to after a loss.

Recoverable depreciation is the difference between the actual cash value (ACV) and the replacement cost (RCV) of your damaged property. ACV is the current value considering depreciation, while RCV is the cost to buy or build a new one.

Insurers typically break down payments into two steps after a claim: an initial ACV payment and a second payment for recoverable depreciation. To receive the second payment, you must submit proof that all repairs or replacements are complete.

To ensure you receive the full payout, review your policy to check if it includes RCV. Keep all receipts and estimates for repairs or replacements, meet repair deadlines, and communicate any changes to your insurer promptly.

Recoverable depreciation is only applicable to losses covered by your policy. If the loss isn’t covered, you won’t be able to recover depreciation. Only policies with RCV offer recoverable depreciation, while ACV policies reimburse based on the item’s current value.

Roofs are usually eligible for recoverable depreciation under RCV policies. Your insurer will pay the ACV first, then release the depreciation amount after repairs. Nonrecoverable depreciation may apply to older roofs or cosmetic damage. Review your policy to understand how depreciation is handled.

Read more at Yahoo Finance: What it is and how to get your full payout