Insurance term · plain English
Depreciation
The amount the carrier subtracts from replacement cost because your stuff was used — held back until you actually finish the repairs.
What it actually is
Insurance depreciation is calculated using either age-life schedules (roof, HVAC) or condition-based judgment (interior finishes, contents). The carrier’s estimating software (Xactimate, Symbility) applies a depreciation percentage per line item. On an RCV policy, that depreciation is "recoverable" — you get it back as a second-stage payment after the work is complete. On an ACV-only policy, depreciation is permanent.
Why it matters for a claim
Depreciation is the single biggest lever in most claim disputes. A carrier’s estimator can shave 30–50% off a dwelling line item just by choosing a steeper age-life curve, even on materials that don’t actually depreciate that fast (drywall, framing, paint underlayment). Auditing the depreciation column line-by-line — and citing manufacturer life expectancy or IICRC reconditioning standards — recovers serious dollars.
Example
Carrier estimate: kitchen drywall, $4,200 RCV, 40% depreciation, $1,680 held back. The drywall in question is 6 years old in a non-bathroom interior — manufacturer life expectancy is 30+ years. Defensible depreciation: closer to 15%, which moves $1,050 from "held back" to "paid now," and another $630 from "permanent loss" if it was ACV-only.
Apply this to your actual policy.
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