Coverage basics
Replacement cost, actual cash value and the depreciation you may recover
Why the first payment on a Florida property claim can look low, how withheld depreciation works, and what to keep to recover it after repairs.
By Ricardo Arevalo, Florida Public Adjuster · Published
Two ways to value a loss
Replacement cost value (RCV) is what it costs today to repair or replace damaged property with materials of like kind and quality. Actual cash value (ACV) is generally that cost minus depreciation for age and condition. Which one applies depends on the policy and on the type of property: the dwelling, the roof and your belongings can each be settled differently.
Why the first check can look low
When a dwelling is insured at replacement cost, Florida law requires the insurer to pay at least the actual cash value first, less the deductible, and the rest as repairs are performed. The withheld amount is often called recoverable depreciation. A simplified example:
- Replacement cost of the repair: $30,000
- Depreciation applied by the insurer: $8,000
- Deductible: $5,000
- Initial payment: $30,000 − $8,000 − $5,000 = $17,000
- Possible later payment as repairs are completed: up to $8,000
Roofs and belongings
Some Florida policies use a roof payment schedule that pays a percentage of the roof cost based on its age and material, and some allow the insurer to pay the roof at actual cash value until the roof deductible is paid. Personal property is often settled at actual cash value unless replacement cost coverage for contents was purchased. The declarations page and endorsements show which terms apply.
Keep the paper trail
Recovering withheld depreciation usually depends on proof that the work was done:
- The insurer’s estimate showing depreciation line by line
- Contracts, invoices and proof of payment for the repairs
- Photos of the completed work
- Receipts for replaced belongings
Ask the insurer what it needs to release the depreciation and whether the policy sets a time limit to complete repairs.
Questioning the depreciation
Depreciation is an estimate. The ages, conditions and items depreciated can be questioned when they do not match the property. An underpaid claim review compares the insurer’s estimate, depreciation included, with the documented damage and available repair estimates.
Frequently asked questions
What is recoverable depreciation?
It is the part of a replacement cost claim that is withheld at first and usually paid after the repairs or replacements are completed and documented.
Is actual cash value the same as market value?
Not usually. In property claims, actual cash value generally means replacement cost minus depreciation, not what the home would sell for.
Does Florida require insurers to pay replacement cost?
Florida requires insurers to offer replacement cost coverage for the dwelling. When the dwelling is insured at replacement cost, the insurer must initially pay at least the actual cash value and pay the remaining amounts as repairs are performed, subject to the policy.
General information only, based on Florida law at the date shown. It is not legal advice, and initial guidance does not replace an evaluation by a licensed public adjuster.
