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DanYo | Who keeps/gets the depreciation on insurance claims? |
My house was damage a month ago by hail and i been in the process of hiring a contractor. I know that depreciation is the wear value of what something is worth over time. What i want to know is who gets that "depreciation money"?
For example, on my line item that i got from my insurance it says that the RCV for R&R shingles is $4700 and the ACV is $4000. the depreciation is $700 so who keeps or gets that $700? the homeowner or contractor?
A contractor said that THEY get the depreciation once the whole repair is done. and we pay him $4000(thats the claim check) and he invoice the $700 from the insurance company......IS THAT ABOUT RIGHT? =/ this is my first insurance claim so im still confused and learning
thanks |
 
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jlf
 |
No one "gets" the depreciation. The insurance company only pays the ACV, period. Any shortfall for the replacement work is made up by you. |
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cypheron
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You should ask your insurance company for clarification. |
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JJ
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Insurance is to make you whole after a loss, not to make a profit. In your case, you have a roof repair needed, but you got some use out of the shingles before they were damaged. The $700 of depreciation is the use/benefit you received over the past few years. The insurance is not going to pay for that portion you already used.
Another example is a vehicle. If you bought a car and then had a total loss 6 months later, your insurance would not pay you your purchase price on the car because the car isn't worth that much anymore. This same principal applies to most insurance policies.
When in doubt, talk to your insurance agent. He/she is a professional that deals with this every day and can give you much more specific answers because of his/her knowledge of your policy and loss.
Good luck; I hope this helps. |
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mbrcatz
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Most homeowners policies, the house itself is written on a "replacement cost" valuation - so the insurance company has to "eat" the cost of depreciation.
If you choose not to replace, then the insurance company keeps the $700. If you DO replace, then the insurance company PAYS the $700.
No one "gets" depreciation. You can't get a negative. You get paid actual cash value, and if you make the repair, you THEN get the replacement cost. You can't get replacement cost if you don't replace.
Yes, your contractor is right. |
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MSAD
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It depends on exactly what type of policy you have as to what happens with deprecation.
Some policies are RCV (Replacement Cost) but have hold back provision. The insurance company subtracts deprectation. If you get the work done (usually with in 180 days of the loss) - you take the receipt to the insurance company and they will pay you the deprecation. If you chose not to get the work done - you don't get it.
Some polices are ACV (Actual Cash Vaue). These are usually Dwelling Policies or Fire Policies. With these the insurance company only owes you the deprecated value. So you can't go back and get the deprecation.
However, the contractor has to be paid for the entire cost of the job. That means you owe in 4700.
Give your adjuster a call. They can tell you if you have the kind of policy that will pay you back the deprecation after the job is done or not. |
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