ACV, RCV And Recoverable Depreciation

By Taylor Grant, licensed public adjuster · Published November 5, 2019 · Updated September 24, 2026

Why the first check is smaller than the estimate, what the missing money is called, and exactly how to get it released. This is the most expensive thing property owners do not know.

This is the single most expensive gap in what property owners know, and it is entirely mechanical once you have seen it once.

The three numbers

Replacement cost value (RCV) - what it costs today to replace what you had, with materials of like kind and quality, at current labor rates.

Depreciation - the value of the life the item already used up. A shingle with a twenty-five year expected life that is fifteen years old has used roughly sixty percent of its life.

Actual cash value (ACV) - replacement cost minus depreciation. Roughly, what the thing was worth the moment before the storm.

How the payment is actually structured

On a replacement cost policy - which most Colorado homeowners and commercial property policies are, but check your declarations page - the carrier pays in two stages:

The $12,000 is called recoverable depreciation. It is not a deduction and it is not a negotiation. It is your money, held until you prove the work was done, because the policy pays replacement cost only if you actually replace.

The owner who does not know this sees $18,000, decides the insurance company shorted them by half, patches the roof, and never sees the other $12,000.

Getting it released

1. Do the work. Replacement cost is conditional on replacement.
2. Get a final invoice showing what was actually spent, itemised, on the contractor's letterhead.
3. Photograph the completed work.
4. Send it in writing, referencing the claim number, and ask specifically for release of the recoverable depreciation.
5. Follow up on a date you write down. Carriers do not chase you.

If the final cost came in above the estimate, that is a supplement, not a lost cause - send the documentation showing why.

If it came in below, you generally recover what you actually spent, up to the replacement cost. The policy pays the cost to replace, not a bonus.

Non-recoverable depreciation

Some policies, some items and some endorsements depreciate on a non-recoverable basis - actual cash value only, period. This shows up on:

• Actual cash value policies, common on older roofs and on some commercial and investor policies.
• Roof payment schedule endorsements, which step the recovery down by roof age.
• Specific categories - fences, awnings, outbuildings, sometimes carpeting.

Check the declarations page and the endorsements. If your roof is on an ACV schedule, that changes the arithmetic on the whole claim and you want to know before you sign a contract to replace it.

Where depreciation is argued

Depreciation is an estimate of used life, and estimates can be wrong. It is worth challenging when:

• The age is wrong. They depreciated a nine-year-old roof as twenty.
• The expected life is wrong. They applied a twenty-year life to a thirty- or fifty-year product. Manufacturer literature settles this.
• Labor was depreciated. Whether labor may be depreciated at all is contested and varies by jurisdiction and policy language. It is worth asking how the labor line was treated.
• The condition was better than assumed. Documented maintenance, a recent inspection, a roof certification.

And the deductible

The deductible comes off once, and it is yours to pay. Anyone offering to cover, waive or absorb it is proposing something Colorado's roofing statute prohibits and that makes the claim false. How deductibles actually work, including percentage wind-and-hail deductibles, which surprise people badly.

If you have a first check in hand and are not sure which of these numbers you are looking at, send us the summary page. Reading it takes a minute and it is free.

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