Ch 10 · Settlement and Beyond
Module 10.1
Calculating and Recovering Depreciation
The withheld $ you're owed. The 2-step payout. The 180-day deadline. Documentation that releases the second check.
10 min read
What you'll learn
The withheld dollars you're owed. The 2-step payout. The 180-day deadline. The documentation that releases the second check.
10.1.1 The 2-step payout (recap)
(Detail in Module 2.5)
| Step | When | Amount |
|---|---|---|
| 1. ACV check | After claim approval | Replacement cost minus depreciation |
| 2. Recoverable depreciation | After repairs completed + documented | The withheld depreciation amount |
Without completing step 2, you forfeit the depreciation. The carrier keeps it.
10.1.2 The 180-day deadline
Most FL Replacement Cost policies require:
- Repairs completed within 180 days of the date of loss (or sometimes 365 days)
- Documentation submitted within the same window
- Some policies allow extensions for cause (contractor delay, supply shortages)
Verify your specific policy. This is one of the most consequential deadlines in the entire claim.
If you can't meet 180 days due to:
- Contractor backlog
- Material lead times
- Carrier delay (their own slowness)
- Building department permitting
→ request extension in writing before deadline expires. Document the cause.
10.1.3 What documentation releases the depreciation
Carriers typically require:
| Document | Why |
|---|---|
| Contractor invoices | Proof repairs were done |
| Paid-in-full receipts | Proof you paid (not just billed) |
| Lien waivers | Proof contractor has been paid + won't lien property |
| Photos of completed work | Visual confirmation |
| Final inspection certificate | If permitted work, building dept signoff |
| Sometimes: contractor certification letter | Some carriers require notarized statement |
The standard isn't "almost done" — it's completed and paid.
10.1.4 The submission package
Build a complete submission:
Subject: Recoverable Depreciation Claim — Claim # [#]
I am submitting documentation for recovery of the depreciation
portion of my claim, completed within the policy timeframe.
Original ACV payment: $[X] (received on [date])
Depreciation withheld: $[Y]
Total RCV: $[X+Y]
Repairs completed:
- [Item 1] — Contractor: [Name] — Invoice attached (Exhibit A)
- [Item 2] — Contractor: [Name] — Invoice attached (Exhibit B)
- [etc.]
Total documented repair cost: $[Z]
Per the policy's loss settlement provision, I respectfully request
release of the recoverable depreciation in the amount of $[Y]
within the timeframe required by Fla. Stat. § 627.70131.
Attachments:
- Exhibit A: Contractor invoice [#]
- Exhibit B: Paid receipts
- Exhibit C: Lien waivers
- Exhibit D: Photos of completed work
- Exhibit E: Final inspection certificate
- ...
10.1.5 What if repair cost exceeded the RCV?
Sometimes actual repair cost is higher than the RCV the carrier originally calculated.
General rule: carrier pays the lesser of (a) actual repair cost or (b) policy limit/RCV.
If actual cost exceeds policy RCV → you're out of pocket for the difference.
Exception: if RCV was wrong (carrier underscoped/underpriced), you may have a supplement claim. Document the gap.
10.1.6 What if repair cost was less than RCV?
Sometimes actual repair is lower than the RCV.
Common reasons:
- You DIY'd part of the work (no labor charge to you)
- You found a contractor cheaper than the carrier's estimate
- You decided not to do certain items
Carrier may not pay the full RCV in this case — only what you actually spent. You receive your ACV plus the recovered depreciation up to the actual amount spent.
Exception: some policies pay full RCV regardless of actual cost. Read your policy.
10.1.7 Common depreciation recovery disputes
"Repairs weren't completed within 180 days."
Counter:
- Document the cause of delay (contractor, materials, building dept, carrier)
- Cite extensions allowed by policy
- Argue good faith effort despite delay
"Documentation insufficient."
Counter: provide whatever's specifically missing. Press for what they need.
"Contractor wasn't licensed."
Counter (if licensed): provide license verification. Most FL policies require licensed work.
"Quality of work doesn't match the scope."
Counter: photos of completed work. Building inspection sign-off. Industry standard work.
"We're depreciating the new repairs."
Counter: that's not how recoverable depreciation works. The depreciation withheld at ACV is to be released after repairs. Not new depreciation on new work.
10.1.8 The cash-out vs repair tradeoff
You have a choice:
Path A — Take ACV + DIY / partial repair / no repair
- Cash now
- Forfeit depreciation
- Get repairs done your way (or not at all)
Path B — Complete repairs to RCV standard, recover depreciation
- More work
- Higher net recovery
- Repaired to standards documented
Math the situation:
| Scenario | Math |
|---|---|
| ACV check $25K, RCV $40K, $15K depreciation | If repairs cost $30K out of pocket, net = $25K + $15K - $30K = $10K |
| Same scenario, you DIY'd / done partial | Net = $25K (less your DIY costs); forfeit $15K |
For most claims, completing repairs and recovering depreciation is the better economic outcome — by a wide margin.
10.1.9 Action steps
- Calendar your 180-day deadline the day you receive the ACV check.
- Hire a licensed contractor to do the work to the carrier's scope.
- Document everything — invoices, payments, photos, lien waivers.
- Submit the recovery package as soon as repairs complete.
- Follow up if depreciation isn't released within reasonable time.
- For delays: request extension in writing before the deadline expires.
Next: 10.2 Reading and Signing Releases.
Educational. Not legal advice. Specific recoverable depreciation provisions vary by policy. Verify against your specific policy.