Depreciation (Recoverable vs. Non-Recoverable)
Definition:
The reduction in value of property due to age, wear, or use.
Explanation:
Some policies allow you to recover depreciation after repairs (recoverable depreciation), while others only pay the actual cash value (non-recoverable). This affects how much you’re reimbursed.
Example:
If damaged carpet is valued at $3,000 new but is depreciated to $1,800, you may receive $1,800 unless your policy covers recoverable depreciation, in which case you can recover the full $3,000 after replacement.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.