By The Roofing Brief Team | Last reviewed: October 2026
On a recoverable depreciation roof claim, the insurer pays the actual cash value first (replacement cost minus depreciation minus your deductible) and releases the withheld depreciation only after the roof is replaced and you prove what it cost. Under the standard ISO homeowners form HO 00 03, the insurer “will pay no more than the actual cash value of the damage until actual repair or replacement is complete,” and you must give notice of your intent to claim the rest within 180 days of the loss (ISO HO 00 03 10 00 sample, Insurance Information Institute).
The money at stake is large on a roof. On a $16,800 replacement for a 10-year-old shingle roof, depreciation of 40% means $6,720 sits with the insurer until the job is finished, using the 4% per year rate Travelers shows for a 25-year shingle roof in its depreciation claim guide.
Recoverable depreciation key numbers at a glance
Five figures decide most roof depreciation outcomes: the notice window, the completion deadline, the depreciation rate, the small-loss exception and any state floor (180 days, 2 years, 4% per year, $2,500 and 12 months in the rows below). Each row below comes from a filed policy form, a carrier guide or a statute.
| Figure | Value | Source |
|---|---|---|
| Notice of intent to claim replacement cost | Within 180 days after the date of loss | ISO HO 00 03 10 00, Condition C.2.e |
| Completion deadline on one carrier’s filed form | Finish within 2 years of the loss, notify within 30 days after the work | State Farm Homeowners Policy HW-2136 (Oklahoma) |
| Small-loss exception (no proof of completion needed) | Repair under $2,500 and under 5% of the dwelling limit | ISO HO 00 03 10 00, Condition C.2.d |
| Example depreciation rate, 25-year shingle roof | 4% per year (40% at age 10) | Travelers claim guide |
| California minimum time to collect replacement cost | 12 months from the first ACV payment; 36 months after a declared state of emergency | Cal. Ins. Code 2051.5(b) |
| Florida claim notice deadline | 1 year after the loss; 18 months for a supplemental claim | Fla. Stat. 627.70132 |
How a recoverable depreciation roof claim pays: a worked example
A recoverable depreciation roof claim pays in two checks. The first check is replacement cost value (RCV) minus depreciation minus the deductible. The second check is the withheld depreciation, released after the work is complete, capped at what you actually spent. The example below uses $7.00 per sq ft installed, inside the $5 to $8 range for architectural asphalt in the 2026 roofing cost report.
| Line | Amount | How it is calculated |
|---|---|---|
| Roof size | 24 squares (2,400 sq ft) | Adjuster measurement, input |
| Replacement cost value (RCV) | $16,800 | 2,400 sq ft x $7.00 |
| Roof age and assumed life | 10 years of 25 | Straight line, 4% per year (Travelers example rate) |
| Depreciation withheld | $6,720 | $16,800 x 40% |
| Actual cash value (ACV) | $10,080 | $16,800 minus $6,720 |
| Deductible | $1,000 | Flat deductible, input |
| First check | $9,080 | $10,080 minus $1,000 |
| Second check (recoverable depreciation) | $6,720 | Released after completion and proof of cost |
| Total from insurer | $15,800 | RCV $16,800 minus the $1,000 deductible |
Every figure above is a Roofing Brief estimate built to show the arithmetic, not a quote. Swap in your adjuster’s RCV, your roof age and your deductible, and the same four lines give your own first and second check.
How insurers calculate roof depreciation
Roof estimates usually depreciate by age divided by an assumed life, then adjust for condition. Xactimate, the estimating software Xactware sells to carriers and contractors, offers Amount, Percent and Age/Condition methods, and its Age/Condition method “is calculated based on the age of the item in years” (Xactware help: depreciation in Xactimate desktop).
The assumed life changes the answer more than any other input. The table applies straight-line math to the same $16,800 roof at a 25-year life (the Travelers example) and a 30-year life (a Roofing Brief comparison case, 3.33% per year).
| Roof age | Depreciation, 25-year life | ACV, 25-year life | Depreciation, 30-year life | ACV, 30-year life |
|---|---|---|---|---|
| 5 years | 20% ($3,360) | $13,440 | 16.7% ($2,800) | $14,000 |
| 10 years | 40% ($6,720) | $10,080 | 33.3% ($5,600) | $11,200 |
| 15 years | 60% ($10,080) | $6,720 | 50% ($8,400) | $8,400 |
| 20 years | 80% ($13,440) | $3,360 | 66.7% ($11,200) | $5,600 |
At 20 years, the life assumption alone moves the first check by $2,240 on a $16,800 roof. If the estimate does not show the life used, ask the adjuster in writing which age, life expectancy and condition setting produced the depreciation line.
Recoverable vs non-recoverable depreciation: what the policy wording says
Depreciation is recoverable when the loss settlement clause pays replacement cost after repair; it is non-recoverable when the policy settles the roof at actual cash value or on a roof payment schedule. The deciding words in ISO HO 00 03 are “until actual repair or replacement is complete,” which means the insurer owes the difference once the work is done.
| Settlement type | First payment | After the roof is replaced | Policy wording to look for |
|---|---|---|---|
| Replacement cost with holdback | ACV minus deductible | Withheld depreciation paid, up to the amount actually spent | “until actual repair or replacement is complete” (ISO HO 00 03) |
| Actual cash value only (roof) | ACV minus deductible | Nothing more; depreciation is non-recoverable | ACV roof endorsement or roof surface payment schedule |
| Small loss on an ISO form | Full replacement cost minus deductible | No proof of completion needed | Repair under $2,500 and under 5% of Coverage A (Condition C.2.d) |
| Total loss of a Florida dwelling | Replacement cost with no holdback | Not applicable | Fla. Stat. 627.7011(3)(a) |
A roof-only ACV endorsement on an otherwise RCV policy means no second check at all: on the $16,800 example, the $6,720 of depreciation stays with the insurer even on a roof replaced in full. How those endorsements work, and how to switch back, is covered in our actual cash value roof guide.
Deadlines to collect recoverable depreciation
There are two different clocks: a notice deadline to say you intend to claim replacement cost, and a completion deadline to finish the work. The ISO HO 00 03 form sets only the first (180 days); many carrier forms add the second, and some states set minimums the carrier cannot shorten.
| Source | Rule | What it means for a roof claim |
|---|---|---|
| ISO HO 00 03 10 00 | Notify the insurer of intent to claim replacement cost within 180 days after the date of loss | The 180 days is a notice window; the form does not say the roof must be finished in 180 days |
| State Farm HW-2136 (Oklahoma, filed form) | Complete repair or replacement within 2 years after the date of loss and notify within 30 days after completion | A completion deadline plus a 30-day reporting step |
| Travelers claim guide | Notify of intent to recover depreciation “within 6 months or 180 days of the date of loss” in most instances | Matches the ISO notice window; Travelers says some states differ |
| Cal. Ins. Code 2051.5(b) | No time limit under 12 months from the first ACV payment; 36 months for a loss tied to a declared state of emergency; 6-month extensions for good cause | California homeowners get at least a year, longer after wildfire or other emergency declarations |
| Fla. Stat. 627.70132 | Claim notice within 1 year of the loss; supplemental claim within 18 months | A claim-filing deadline, separate from the policy’s depreciation window |
If permits, material shortages or contractor scheduling will push the roof past the policy date, ask for a written extension before the 180-day or 2-year date passes, cite the reason and keep the reply. California’s 2051.5(b)(2) requires 6-month extensions for good cause, including permit delays and lack of materials; in other states extensions depend on the carrier.
Does the insurer depreciate labor on a roof claim?
It depends on the policy definition and the state. Depreciating labor can cut the first check by thousands of dollars on a tear-off, because removal and installation lines are mostly labor; in the example below the gap is $4,032 on a $16,800 roof. On an RCV policy where you finish the work, the total paid is the same either way; the difference lands in the first check and in any claim that is never completed.
| Jurisdiction or document | Labor depreciation rule | Source |
|---|---|---|
| State Farm HW-2136 (Oklahoma) | ACV definition says materials, labor (including tax) and overhead and profit “are subject to depreciation” | Filed policy form, 2017 |
| California | Labor to repair or replace is “not a component of physical depreciation,” except labor built into manufactured goods | 10 CCR 2695.9(f)(1), Fair Claims Settlement Practices Regulations |
| Illinois | Labor may not be depreciated when the policy does not define actual cash value | Sproull v. State Farm, 2021 IL 126446 (analysis) |
| South Carolina | Embedded labor may be depreciated when the policy does not define actual cash value | Butler v. Travelers, S.C. Supreme Court, May 2021 (summary) |
| Michigan | Depreciating labor, taxes, fees and overhead and profit requires a standalone, optional endorsement at a reduced premium for policies issued or renewed from January 1, 2025 | DIFS Bulletin 2024-26-INS (superseding 2024-18-INS) |
The effect is easy to price. Assume the $16,800 roof splits 40% materials ($6,720) and 60% labor and other costs ($10,080), an illustrative split. Depreciating everything at 40% withholds $6,720; depreciating materials only withholds $2,688. The first check moves from $9,080 to $13,112, a $4,032 difference, while the final total stays $15,800 once the roof is done.
What changes the second check: lower invoice, higher invoice, or no roof
The recoverable depreciation check is capped at what you actually spend. ISO HO 00 03 limits replacement cost to the least of the policy limit, the like-kind replacement cost, or “the necessary amount actually spent,” so a cheaper contractor shrinks the second check rather than leaving you the difference.
| Scenario (same $16,800 RCV, $1,000 deductible, $9,080 first check) | Second check | Total from insurer | Homeowner pays contractor beyond insurance |
|---|---|---|---|
| Final invoice $16,800 (matches estimate) | $6,720 | $15,800 | $1,000 (the deductible) |
| Final invoice $15,500 | $5,420 | $14,500 | $1,000 (the deductible) |
| Final invoice $18,200, no approved supplement | $6,720 | $15,800 | $2,400 |
| Final invoice $18,200, $1,400 supplement approved before work | $8,120 | $17,200 | $1,000 (the deductible) |
| Roof never replaced | $0 | $9,080 | Not applicable; $6,720 forfeited |
The supplement row assumes the carrier approves the added $1,400 as new replacement cost with the depreciation already applied to the base estimate; a carrier may depreciate supplemented items too. Supplements for items such as drip edge or ice barrier work best when submitted with photos and line items before the crew starts.
Florida and Texas rules that hold back roof money
Florida and Texas both let insurers hold roof money until the policyholder proves the deductible was paid. Florida Statute 627.7011(3)(a) says a replacement cost insurer “must initially pay at least the actual cash value” less the deductible and pays the rest “as work is performed and expenses are incurred” (Fla. Stat. 627.7011, 2025).
If a separate Florida roof deductible applies, the insurer may limit the roof payment to ACV until it receives reasonable proof of payment of that deductible, such as a canceled check, money order receipt, credit card statement or financing contract. Under Fla. Stat. 627.701(10), that roof deductible may not exceed the lesser of 2% of Coverage A or 50% of the roof replacement cost.
| Florida roof deductible check | Example value | Rule |
|---|---|---|
| Coverage A limit | $350,000 | Input |
| 2% of Coverage A | $7,000 | 627.701(10)(a)2 |
| 50% of roof replacement cost ($16,800) | $8,400 | 627.701(10)(a)2 |
| Maximum roof deductible | $7,000 (the lesser) | 627.701(10)(a)2 |
| When the roof deductible cannot apply | Hurricane, tree fall that punctures the deck, repair of less than 50% of the roof, total loss | 627.701(10)(a)5 |
Texas Insurance Code 707.004, added by HB 2102 in 2019, lets a replacement cost insurer “refuse to pay a claim for withheld recoverable depreciation or a replacement cost holdback” until it receives reasonable proof that the deductible was paid (HB 2102 enrolled text). The same bill amended Business and Commerce Code 27.02 so that a seller who pays, waives or absorbs the deductible commits a Class B misdemeanor, and contracts of $1,000 or more paid from claim proceeds must carry a 12-point bold deductible notice.
Reading the Xactimate estimate before you sign
In a roof estimate written in Xactimate, each line can be set to recoverable or non-recoverable depreciation. Xactware’s help pages say the adjuster selects the Recoverable checkbox per line item and can switch on project-level options to “depreciate non-material” costs such as labor and equipment, sales tax, and overhead and profit.
- Check the summary page for three totals: RCV, depreciation and net claim. If depreciation is split into recoverable and non-recoverable amounts, the non-recoverable part will not come back after the roof is done. On the worked example, the three totals read $16,800, $6,720 and $15,800.
- Check the age and life used on the shingle line. A 10-year-old roof depreciated at 60% implies a life near 16.7 years, not 25 years.
- Check whether tear-off, haul-off and labor-heavy lines carry depreciation. In California, 10 CCR 2695.9(f)(1) bars depreciating labor except labor built into manufactured goods.
- Check that code items are listed. Missing drip edge, ice barrier or starter lines are supplement items that should be requested before work begins.
How to collect recoverable depreciation, step by step
Collecting recoverable depreciation is a paperwork sequence with dates. The steps below follow the ISO HO 00 03 conditions and the State Farm HW-2136 wording, which together cover the 180-day notice window, the 2-year completion window and the 30-day reporting step.
- Read the declarations page and the Coverage A loss settlement clause. Find the phrase “until actual repair or replacement is complete” and any roof ACV endorsement, then write down the notice and completion dates (180 days and 2 years on the forms above).
- Send written notice of intent to claim replacement cost within 180 days of the date of loss, even if the roofer cannot start yet. Use email plus a mailed letter and quote the claim number, as Travelers asks on all correspondence.
- Compare the adjuster’s estimate with the contractor’s bid line by line. Request any supplement (with photos and quantities, such as 24 squares of shingles or 210 linear feet of drip edge) before tear-off, while the old roof can still be photographed.
- Sign a contract priced at or below the approved RCV where possible, with the deductible shown as a separate line. In Texas, a contractor who waives or absorbs it commits a Class B misdemeanor under Business and Commerce Code 27.02.
- Complete the roof inside the policy window, for example 2 years on State Farm HW-2136 or at least 12 months from the first ACV payment in California.
- Within 30 days of completion (the HW-2136 reporting step), send the final invoice, completion certificate, photos and proof of deductible payment.
- Track payment. The ISO form makes a loss payable 60 days after the insurer receives proof of loss and reaches agreement with you, an appraisal award is filed, or a judgment is entered.
- If the second check is short, ask for the line-by-line reason in writing. If you and the insurer disagree on the amount, the ISO appraisal clause has each side pick an appraiser within 20 days of a written demand.
Documents to send with the depreciation request
Insurers release recoverable depreciation on proof of cost and completion. Travelers lists “invoices, signed contracts, receipts and/or canceled checks” and asks you to note on each document what work was done; the table maps each document to the rule it satisfies.
| Document | Why the insurer wants it | Who produces it |
|---|---|---|
| Final itemized invoice in squares and linear feet | Proves “the necessary amount actually spent” (ISO HO 00 03) | Contractor; see our roofing invoice template |
| Signed contract | Shows scope and price match the estimate | Contractor and homeowner |
| Certificate of completion | Proves “actual repair or replacement is complete” | Contractor; see the roofing certificate of completion |
| Proof of deductible payment | Required before release in Texas (Ins. Code 707.004) and for a Florida roof deductible (627.7011) | Canceled check, card statement or financing contract |
| Permit final inspection record, where a permit is required | Third-party proof of completion date | Local building department |
| Before and after photos with dates | Matches the replaced items to the estimate lines | Homeowner or contractor |
| Lien waiver on final payment | Protects you and any mortgage lender on two-party checks | Contractor and major suppliers |
Who keeps the recoverable depreciation check?
The insurer pays you, not the roofer, unless someone else is named in the policy or legally entitled to payment. ISO HO 00 03 Condition I says “We will pay you unless some other person is named in the policy,” and the mortgage clause pays Coverage A losses “to the mortgagee and you, as interests appear,” which is why roof checks often carry the lender’s name.
The check still funds the roof. If the contract price equals the $16,800 RCV, you owe the contractor $16,800: the $9,080 first check, the $6,720 depreciation check and your $1,000 deductible. Some contractors collect the depreciation check directly through a signed direction to pay; read that document before signing, because it changes who receives money you are owed.
In Florida, an assignment of post-loss benefits is void for residential policies issued on or after January 1, 2023, under Fla. Stat. 627.7152(13). A Florida contractor can be paid from claim proceeds through the homeowner, but cannot take over the claim by assignment on those policies.
What not to say to the insurance adjuster about the roof
Avoid statements that turn storm damage into wear and tear, because ISO HO 00 03 excludes loss caused by “wear and tear, marring, deterioration.” Give dates and facts you can document, and let the inspection findings speak for the cause. Our insurance adjuster roof inspection guide covers what adjusters check on the roof.
- Do not guess the storm date. Use the date from a National Weather Service storm report or your own dated photos.
- Do not say the roof “has leaked for years” or “was due anyway.” Both invite a wear-and-tear finding under the HO 00 03 exclusion.
- Do not say you will not replace the roof before you decide. Under the ISO form you have 180 days to give notice of intent, and saying no early can complicate the second check.
- Do not accept a final number on the roof. Ask for the written estimate with RCV, depreciation and the life used, then compare it line by line inside the 180 days allowed for notice.
Which move fits your claim?
Use the decision table to match your situation to the next step, from notice within 180 days to naming an appraiser within 20 days. Each row names the clause or statute to quote back to the adjuster.
| If your situation is | Do this | Controlling rule |
|---|---|---|
| Policy says “until actual repair or replacement is complete” | Send written notice of intent to claim replacement cost within 180 days | ISO HO 00 03, Condition C.2.e |
| Policy has a roof ACV endorsement or payment schedule | Treat the depreciation as gone; check the endorsement date and switch options at renewal | Your endorsement wording |
| Contractor bid is lower than RCV | Expect the second check to shrink to the amount spent minus the first check | ISO HO 00 03, “necessary amount actually spent” |
| Contractor bid is higher than RCV | Request a supplement with photos and quantities before tear-off | Carrier supplement process |
| Work cannot finish before the deadline | Ask for a written extension before the date passes; in California cite the 6-month good-cause extension | Cal. Ins. Code 2051.5(b)(2) or carrier practice |
| Repair is under $2,500 and under 5% of Coverage A | Ask for full replacement cost without proof of completion | ISO HO 00 03, Condition C.2.d |
| Texas claim, or a Florida roof deductible applies | Pay the deductible and send a canceled check, card statement or financing contract | Tex. Ins. Code 707.004; Fla. Stat. 627.7011(3)(a) |
| You disagree with the depreciation amount | Demand appraisal in writing; each side names an appraiser within 20 days | ISO HO 00 03, Condition E |
A denied roof follows a different appeal path, covered in our roof insurance claim denied guide.
For the full storm claim sequence from inspection to closeout, see the hail damage roof insurance claim process.
Frequently asked questions
How does recoverable depreciation work on a roof claim?
The insurer first pays actual cash value: replacement cost minus depreciation minus the deductible. On a $16,800 roof that is 10 years into a 25-year life, $6,720 is withheld. After the roof is replaced, you send the final invoice and proof of completion, and the insurer releases the withheld amount, capped at what you actually spent.
Who keeps the recoverable depreciation check?
The policyholder does. ISO HO 00 03 says the insurer pays you unless another person is named in the policy, and a named mortgage lender is added to Coverage A checks as its interest appears. The money is still owed to your roofer under the contract, so the check normally passes through you to pay the final invoice.
Does recoverable depreciation go to the contractor?
Only through you, or through a document you sign. A direction to pay can route the depreciation check (the $6,720 in our worked example) to the roofer, and outside Florida some contractors use an assignment of benefits. In Florida, assignments of post-loss benefits are void for residential policies issued on or after January 1, 2023, under Fla. Stat. 627.7152(13).
What is the time limit to collect recoverable depreciation?
It depends on the policy and state. ISO HO 00 03 requires notice of intent to claim replacement cost within 180 days of the loss. State Farm’s filed Oklahoma form HW-2136 requires completion within 2 years and notice within 30 days after the work. California sets a floor of 12 months from the first ACV payment, or 36 months after a declared emergency.
What is the actual cash value of a 20 year old roof?
On straight-line math, a 20-year-old roof with a 25-year assumed life is 80% depreciated, so a $16,800 replacement has an actual cash value of $3,360. With a 30-year assumed life it is 66.7% depreciated and worth $5,600. Ask the adjuster which life and condition setting the estimate used, because that input moves the number most.
Will insurance cover a 20 year old roof?
Often yes for sudden storm damage, but the payout depends on the settlement type. On replacement cost with holdback, you can recover the depreciation after replacing the roof. On a roof ACV endorsement, a 20-year-old roof at 80% depreciation pays only about 20% of replacement cost. In Florida, roofs 15 years or older can stay insured if an authorized inspection shows 5 or more years of life remaining.
What not to say to insurance adjuster about roof?
Do not guess the storm date, do not say the roof leaked for years or was due anyway, and do not announce that you will not replace it. ISO HO 00 03 excludes wear and tear, and you have 180 days to give notice of intent to claim replacement cost. Ask for the written estimate showing RCV, depreciation and the life used.
How does a Florida recoverable depreciation roof claim differ?
Florida Statute 627.7011(3)(a) requires the insurer to pay at least actual cash value first and the rest as work is performed. If a separate roof deductible applies, capped at the lesser of 2% of Coverage A or 50% of roof replacement cost, the insurer may pay the roof at ACV until you prove the deductible was paid. Claims must be noticed within 1 year.