Let me paint you a picture of what's happening right now with your insurance claim — the one you filed three weeks ago that's still "under review."
Your carrier received your claim. They acknowledged it. They sent an adjuster who spent 30 minutes on your roof with a tape measure and a tablet. That adjuster wrote an estimate — almost certainly lower than the actual cost of restoration — and your carrier cut you a check for the Actual Cash Value minus your deductible.
But here's the part nobody explained: They held back the depreciation. Thousands of dollars that are part of your claim, part of your coverage, part of what you've been paying premiums for — sitting in their account. Not yours. Theirs.
What Is Recoverable Depreciation?
Recoverable depreciation is the difference between what your damaged property is worth today (ACV) and what it costs to replace it (RCV). If you have a Replacement Cost Value policy — and the vast majority of Texas homeowners do — that depreciation is recoverable. Meaning you get it back once the repairs are completed.
Think of it as your carrier saying: "We'll pay you the full amount, but we're going to hold some of it back until you prove the work is done." On the surface, that seems reasonable. In practice, it's a financial weapon.
The Interest They're Earning on YOUR Money
While that depreciation sits in their account — waiting for you to complete repairs, submit documentation, and jump through whatever hoops they create — your carrier is earning interest on it.
On a $6,000 depreciation holdback at 5% annual yield, they earn roughly $25 per month per claim. That doesn't sound like much until you multiply it by 50,000 claims after a major hailstorm. That's $1.25 million per month in interest — on money that belongs to the policyholders.
The longer they delay releasing that depreciation, the more they earn. And you? You're out on your property with a tarp, waiting for them to return your own money so your contractor can finish the job.
How They Make Sure You Never Collect
The depreciation recovery process is designed to be inconvenient. You need to:
1. Complete the repairs
2. Submit proof of payment (including your deductible)
3. Provide invoices and documentation
4. File within a specific timeframe (often 180 days to 1 year)
Miss any of those steps? They keep it. Don't complete the work? They keep it. Don't know it exists? They definitely keep it.
According to industry estimates, 25% to 40% of recoverable depreciation is never claimed by homeowners. That's not because the work wasn't needed. It's because homeowners didn't know the money existed, couldn't afford to complete the work with the underpaid ACV check, or gave up fighting the bureaucracy.
That is billions of dollars — nationally, annually — that carriers budgeted to pay, are contractually obligated to pay, and get to keep because of a system they designed to be as confusing as possible.
The Depreciation Fraud You Need to Know About
I said this in Week 3 and I'll say it again because it's that important: If you received your recoverable depreciation — if the carrier released that money to you after the contractor completed the work — and you kept it instead of paying the contractor, you have committed insurance fraud.
That depreciation was released because the contractor completed the restoration. It is their earned compensation for the work performed. Keeping it is stealing from the person who fixed your home. It's also a felony under Texas law.
I don't say that to scare you. I say it because the insurance industry has done such a thorough job of confusing everyone about how this money flows that homeowners genuinely don't understand that keeping the depreciation is theft.
What You Should Do Today
1. Check your policy. Confirm you have RCV coverage (most do).
2. Review your claim paperwork. Look for the depreciation holdback amount.
3. Know your deadline. Most policies give you 180 days to 1 year to recover depreciation.
4. Complete the work. Don't leave money on the table because the carrier made it hard to collect.
5. Pay your contractor. Every dollar, including the depreciation, once it's released.
The money is yours. You paid for it. Don't let a corporation keep it because they made the process deliberately complicated.
Next week: Why your insurance company specifically told you not to show the roofer your claim amount — and the real reason they want to keep you isolated.