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If you're well into your insurance claim, you might have noticed that the insurance company sometimes does not give you the full "Replacement Cost Value" (or RCV) up front. In most policies they have the right to hold back the depreciation and only give you the "Actual Cash Value" (or ACV) of an item then once you've expended the money to replace the item you can recover the depreciation. The difference between the RCV and the ACV is the held back depreciation.

For example, say you had a couch that you estimated would cost $2,000 to replace, but the insurance company only gave you $1,250 as the ACV. Once you went and replaced the couch, you found the actual RCV was $2,145.35 and you have a receipt for the item at that cost. If you have a replacement cost policy, the $895.35 difference can be recovered from the insurance company if your claim was not closed by legal negotiations and you have not yet reached the limits for the coverage in question (which in the example is the personal property coverage).

Send copies of your receipts to the insurance company documenting the difference and request a check for the held back depreciation.

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Testimonials

We lost our home in the 2007 Witch Creek Fire in Poway CA. As was the case with most (if not all) of my neighbors, we were drastically under insured through no fault of our own. I don’t believe that anyone is prepared for such a catastrophic emotional and financial loss. The task of completely rebuilding your life is monumental. Fortunately, the city of Poway co-operated with CARe and allowed them to hold bi-weekly insurance meetings in the City Chambers. After attending 2 of the group meetings we then scheduled several one-on-one meetings with CARe and were able to start to piece together the puzzle that is a catastrophic insurance claim. The resources which CARe was able to put us in touch with were incredible, and after they showed us the basics of handling an insurance claim we felt that we had knowledge to work through the once daunting task of negotiating with our insurance company. We could not have made it through the process without the information, help and encouragement that we received from CARe

Witch Creek Fire Survivor, 2007