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How to Get Fair Value for Recoverable Depreciation in a Texas Insurance Claim

Depreciation may mean your initial insurance payment is far smaller than you expectedTexas hailstorms can wreak havoc on cars, landscaping, and the roofs of homes and commercial buildings. If your roof has sustained hail damage that needs repair and you file a claim with your insurer, you may receive payment for far less than it will cost to replace the roof. Texas bad faith insurance claim attorney Attorney Bill Voss explains this common practice, known as recoverable depreciation, and how it should be applied to an insurance claim.

How Recoverable Depreciation Affects Your Hail Damage Roof Claim

Many property insurance policies will include recoverable depreciation, which is an amount for the lost value of your insured item. The easiest way to understand recoverable depreciation is that your insurer provides two separate payments: one to begin repairs, and one when the insurer has proof that repairs have been completed.

For example, let’s say the cost to replace your entire roof is $12,000. The insurer is not required to give you $12,000—it is only required to pay for the value of your old roof. If your old roof was ten years old, cost $10,000, and had a useful lifespan of 20 years, your roof has lost $500 in depreciation per year. This means that your claim is worth $5,000, since your roof would have had only half its original value left.

However, if your insurance policy allows you to recover the depreciation on your lost items, the insurer is required to pay you an additional $5,000 once the work has been completed.

A roof claim with recoverable depreciation generally involves the following details:

Initial payment is received

The policyholder will receive a check from the insurance company for the actual cash value minus the policyholder’s deductible. (In the above example, this would be $4,500 if the policyholder’s deductible is $500).

The repair is completed

The policyholder uses the insurance money to perform roof repairs and the contractor’s invoice is submitted to the insurance company.

Depreciation payment is sent

Once the insurer has proof that the roof has been completed, the insurance company releases the recoverable depreciation payment (in the above example, $5,000) to resolve the claim.

Roof credits are awarded

Some insurers offer new roof credits to policyholders who replace their entire roofs, so it is always worth checking to see if you could be owed a discount.

Texas Bad Faith Insurance Claim Lawyers

It is worth noting that some claimants may be tempted to keep the initial payment and not perform adequate repairs. Unfortunately, this will lose them money in the long run, since any future roof claims will be denied. Recoverable depreciation is not only a way for policyholders to get full payment, it proves to the insurer that repairs were actually completed on a claimed item.

If you are having trouble collecting the full amount of depreciation from your insurer, fill out the form on this page today to contact the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.


Join The Conversation
Jeff Moore 04/06/2019 01:14 PM
this is not a roof claim for a customer it is on my personal home. Safeco insurance totaled my roof due to hail damage and depreciated the removal (labor item) on my claim. I have been an adjuster in Texas for over 20 years and never have i depreciated a labor item. The adjuster says in Texas he can depreciate a labor item. Any Thoughts
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Rick Guerra-Prats 10/15/2019 01:42 AM
If a school district decides to accept a retrofit roof assembly ROOF HUGGER OVERLAY instead of a remove and replace, I believe that the roof overlay should not be depreciated because it is a compromise/repair. Is this correct?
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Eunice Jordan 11/18/2020 05:36 PM
I received an Appraisal Award letter for a claim to have my roof replaced for a total amount of $16000. The insurance paid the first half of 9100 for the Actual Cash Value and stated that the difference which is the depreciation amount was going to get paid after the work gets completed. It was completed and now the insurance is stating that because the amount on the roofers bill was less than the total awarded amount that they won't pay the rest. I can either have the roofer send an itemized final bill to show the depreciation cost in addition to the first bill that didn't show the breakdown or additional costs... OR I shouldn't have to go through this because the awarded amount is due regardless because the job was completed as requested. I need help to recover my depreciation amount owed.
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The Voss Law Firm, P.C. represents clients on a local, national and international basis. We proudly serve companies and individuals along the Gulf Coast and around the globe on a contingency fee basis. Our law firm collects nothing unless we recover on our client's behalf.

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