Depreciation In Home Insurance

Paying attention to some fine print after filing an insurance claim could mean hundreds or even thousands more dollars in your pocket — if you bother to file the required paperwork.

That’s because many insurance companies are now expanding the use of a clause found in most homeowners policies and are holding back a portion of the insurance proceeds you might receive in the name of “recoverable depreciation.”

Depreciation is the difference between the cost required to actually repair or replace something and its value before it was destroyed. While that amount may be withheld from you initially, it becomes “recoverable” once you file the required paperwork and ask that it be refunded to you.

In the past, industry observers say, whether an insurer invoked this policy clause often depended on what type of policy you held.

Not anymore.