Recoverable Depreciation on a Roof Insurance Claim

Posted on December 21, 2023


Frances Badayos | author

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ICHQ | Site Author

In 2021, Hurricane Ida severely damaged the roofs of 90,000 homes in the NOLA metropolitan area. Most homeowners rely on insurance to pay for repairs from hurricanes and severe storms, but the checks they receive may be less than expected due to deductions for recoverable depreciation on a roof. Learn how recoverable depreciation may affect your insurance claim in this guide from Insurance Claim HQ’s home insurance claim lawyers.

What Is Recoverable Depreciation on a Roof?

The average roof lasts from 20 to 50 years. However, because exposure to the elements and normal wear and tear reduces the structural integrity, the value of your roof decreases over time.

This loss of value is known as depreciation. Insurance companies typically deduct this expected loss from claim settlements because the purpose of insurance is to put you back in the same financial position you were in before a loss. However, if you have a replacement value policy, the value lost through depreciation is recoverable.

How Do Insurance Companies Calculate Recoverable Depreciation on a Roof?

Because there is no industry-wide standard for calculating recoverable depreciation, insurance companies all develop their own methods. The most common way is to estimate how long a roof will last and then reduce the roof’s value by a fraction of the overall value each year.

Factors that impact roof insurance claim depreciation

Some insurance companies may use a schedule where they apply more depreciation in the earlier years, while others may simply divide the age of the roof by the expected lifespan. Insurance companies may also factor in the condition of the roof on the date of loss and obsolescence.

Lack of maintenance can cause a roof to wear out faster than expected. In this case, the insurance company may apply more depreciation to account for this additional damage. Your roof’s value may also be lower if newer materials or techniques have made it obsolete.

How Do Insurance Companies Handle a Claim for Recoverable Depreciation on a Roof?

Your insurance company will handle roof insurance claim depreciation differently depending on what kind of policy you have. Replacement value policies have recoverable depreciation, while actual cash value policies do not.

Roof depreciation claims on a replacement value policy

Replacement cost value policies cover the cost to repair or replace your home with equivalent materials at the current market price. For example, if you bought your roof 10 years ago for $20,000, but it would cost $30,000 to put the same roof on today, your policy would pay $30,000 to replace your roof.

However, insurance companies typically hold back a deduction for depreciation until they receive proof that the repairs are complete. For example, if the cost to replace your roof is $30,000, you have a $2,500 deductible and your roof is 50% depreciated, your initial claim check will be for $30,000 x 50% – $2,500 = $12,500.

You would then pay the $12,500 from the insurance company plus your $2,500 deductible to the contractor to get the repairs started. Once your contractor completes the repairs, the contractor will send an invoice to the insurance company for the remaining repair cost, and the insurer will issue the check for the recoverable depreciation to the contractor.

If you elect not to get the work done or fail to provide proof of its completion, the insurance company does not have to send a check for the recoverable depreciation. Depending on the terms of your policy, your insurance company may non-renew your policy if you don’t get your roof repaired.

Roof depreciation claims on an actual cash value policy

Actual cash value policies pay the cost to repair or replace your home at the depreciated value of the property. The depreciation is not recoverable under this coverage, which is why the premiums for ACV policies are usually lower.

In the above example, the insurance company would issue you one check for $12,500 representing the ACV of your claim, less your deductible, and you would have to pay the rest of the repair cost out of pocket.

How Long Do You Have To Claim Recoverable Depreciation on a Roof?

Your insurance policy may say that you have a specific time frame, such as 180 days from the date of loss or repair, to file for recoverable depreciation. However, Louisiana law gives homeowners up to one year to collect recoverable depreciation on a claim for damage caused by a major disaster, such as a hurricane.

Does the Recoverable Depreciation Check Go to the Roofing Contractor?

Unless you opt to pay the entire repair bill yourself instead of waiting for the insurance company to send the money for your recoverable depreciation, the check will go to the contractor who has already performed the work. If you already paid the entire repair bill, the insurance company can send the check to you, but if the contractor charged less money than the full value of your claim, you can’t pocket the difference. Instead, the insurance company will deduct the difference from your check.

How Can a Home Insurance Claim Attorney Help You Recover the Full Value of Your Claim?

Insurance companies may try to reduce the value of your claim by saying that part of your damage was due to poor maintenance or a cause of loss not covered by your policy. Disputes can also arise over the value of your roof and whether you had the damage repaired per the terms of your insurance policy.

Attorneys can conduct an independent investigation to produce evidence to dispute the insurance company’s claims and help you recover the full value of your loss, including any amount the insurance company owes for recoverable depreciation. Your lawyer can also pursue a bad faith lawsuit against the insurance company if the evidence indicates a deliberate attempt to avoid paying a fair settlement on your claim.

Get Help Understanding Your Available Recoverable Depreciation

The home insurance claim lawyers at Insurance Claim HQ can help you hold your insurance company accountable.

If you need help with your claim for recoverable depreciation on a roof, contact us today for a free case evaluation. Contact our team by phone or online for a no-fee evaluation of your case.