Why the first cheque is smaller than the roof costs
A replacement-cost policy pays in two parts, and almost nobody explains the second part.
The insurer starts with what it would cost to put the roof back — the replacement cost. Then it takes off an amount for how old the roof already was, because you had already used up some of its life. That is the depreciation. Then it takes off your deductible, because that is the part you agreed to pay. What is left is the first cheque.
So a $18,000 roof with $9,600 of depreciation and a $2,500 deductible produces a first cheque of $5,900. The cheque looks nothing like the cost of the roof, and it is not meant to.
The money held back usually comes back
The depreciation is not a reduction in what you are owed. On a replacement-cost policy it is held back until the work is done, and released when the completed invoice reaches the insurer. That second payment is called recoverable depreciation, and on the figures above it is $9,600 — considerably more than the first cheque was.
Two things decide whether you actually see it. First, the worksheet has to say the depreciation is recoverable; some is marked non-recoverable, and that portion is never paid. Second, there is a deadline. Policies commonly allow 180 days, 12 months or 24 months from the date of the storm to complete the work and claim the balance, and the money is forfeited if the window closes.
The full calculator works out your deadline from the date of loss and drafts the supplement letter if your roofer's bid comes in higher than the insurer's estimate.
If your cheque does not match
A gap is not automatically a mistake, and it is not usually anyone behaving badly. The question to ask is deliberately narrow, and any adjuster can answer it in a sentence:
“Which line accounts for the difference between the worksheet and the cheque?”
The common answers are all ordinary. There was a separate wind or hail deductible. A prior payment had already gone out. An ordinance-and-law line was held back with the depreciation. Or the worksheet was revised after the copy you are holding was printed. Ask, write down what you are told, and check it against the figures above.
Take this to the phone call
| Line | Amount |
|---|