Recoverable Depreciation Explained: How Minnesota Homeowners Get the Final Insurance Check After a Roof Replacement
If your insurance company sent you a check after a Minnesota hailstorm and you couldn't figure out why it wasn't enough to actually replace your roof. You're not missing money. You're missing the second check. It's called recoverable depreciation, and most homeowners I meet don't know it exists.
Key Takeaways
- On an RCV policy, your insurance pays in two parts: ACV first, depreciation second.
- You only get the depreciation back after the work is complete and the carrier sees your final invoice.
- The depreciation check is often 30 to 60 percent of the total roof claim, sometimes more on an older roof.
- You have a deadline (typically 180 days to 2 years). Miss it and the money is gone.
- Code upgrade coverage and supplements are separate from depreciation and can add thousands more.
What Is Recoverable Depreciation, in Plain English?
Insurance carriers don't pay you to replace your roof in one lump check. On most Minnesota homeowner policies, the ones with Replacement Cost Value (RCV) coverage, they pay you in two stages.
The first stage is Actual Cash Value (ACV). That's what your roof is worth today, after deducting for age, wear, and prior condition. A ten-year-old roof might be valued at 60 percent of a new roof. A twenty-year-old roof might be valued at 30 percent or less.
The amount they hold back, the difference between what a brand-new roof costs (RCV) and what your old roof was worth (ACV), is called depreciation. On an RCV policy, that depreciation is recoverable. You get it back, but only after you actually do the work.
− Depreciation (age, wear, condition)
− Deductible
= ACV check (the first check)
Once you complete the work:
+ Recoverable Depreciation (the second check)
= Total paid by carrier
The reason carriers structure it this way is simple: they want to make sure you actually use the money to repair the roof. If they handed you the full RCV up front and you pocketed it, you'd have an under-insured house and a deteriorating one. By holding the depreciation, they guarantee the work gets done.
What Does This Look Like on a Real Twin Cities Claim?
Let's use realistic numbers from a 2,000-square-foot Maple Grove rambler hit by hail. Your adjuster's estimate uses Xactimate (the industry-standard pricing software) and comes out like this:
- RCV, total cost to replace: $24,800
- Depreciation (12-year-old roof, average wear): − $7,200
- Deductible (1% of dwelling, $3,500 home value): − $3,500
- ACV check (first check): $14,100
The carrier sends that $14,100 within a couple of weeks of the claim being approved. You read the letter, see "$14,100," and wonder how you're supposed to replace a $24,800 roof with that.
You can't. That's the point. Once we replace the roof and you send the carrier the final paid invoice, they release the held depreciation:
- Recoverable depreciation (second check): $7,200
- Total paid by insurance: $21,300
- Your out-of-pocket: the $3,500 deductible
That $7,200 is real money. Homeowners who don't know to ask for it leave it on the table. Carriers don't volunteer it. They wait for you to submit completion paperwork.
How Do I Get the Recoverable Depreciation Check?
Four steps. None of them are difficult, but the order matters.
1. Finish the Work
The carrier doesn't release depreciation until the roof is replaced. Period. If you're stretching the ACV check by doing partial repairs instead of a full replacement, you forfeit the depreciation. (There's a narrow exception called a "partial loss recoverable depreciation" rider on some Travelers and Auto-Owners policies, rare but worth checking your declarations page.)
2. Get a Final Paid Invoice
I issue every Northern Forge customer a final invoice that includes the line-item scope, the materials installed (manufacturer, product line, color), the final total paid, and a Certificate of Completion signed and dated. That document needs to match, or exceed, the RCV on the adjuster's estimate. If the final paid invoice is lower than the RCV, the carrier only releases the depreciation up to what you actually spent.
3. Submit to the Carrier with a Cover Letter
Email or upload the final invoice and Certificate of Completion to the claim file. Reference the claim number. Ask explicitly: "Please release the recoverable depreciation withheld from the original ACV settlement." Most carriers have a portal. State Farm uses ClaimXperience, Allstate uses MyAccount, American Family uses My Account online. If you'd rather not deal with it, we file the paperwork for you on every job.
4. Wait 14 to 30 Days
Standard turnaround is two to four weeks. If you haven't heard anything after 30 days, call the claim rep directly (not the 1-800 number, the rep's name and direct line are on the original adjuster's letter). One follow-up call usually moves it.
How Long Do I Have to Claim Recoverable Depreciation in Minnesota?
This is the part that bites homeowners. Every policy has a deadline. Once it passes, the depreciation is forfeited even if you've already done the work.
- State Farm: typically 1 year from date of loss
- American Family: 1 year from date of loss
- Allstate: 2 years from date of loss
- Travelers: 2 years from date of loss (some endorsements extend to 3)
- Auto-Owners: 2 years from date of loss
- Liberty Mutual / Safeco: 180 days, with extensions on written request
- USAA: 1 year, extensions common
- Erie Insurance: 1 year
The exact deadline is on page one or two of the claim letter your adjuster sent. Read it. If your roof was hit in last June's hailstorm and you've been delaying because of finances or scheduling, the clock is real.
What About Code Upgrades. Are Those Separate?
Yes, and this is where most adjusters underpay. Minnesota building code has changed over the years, and items required today might not have been on your old roof:
- Ice and water shield at eaves and valleys (MN code requires 24 inches up the slope from the warm-side wall at the eave)
- Drip edge on all rakes and eaves
- Updated ventilation ratios (1 sq ft of net free area per 150 sq ft of attic, balanced intake and exhaust)
- Synthetic underlayment in some municipalities
- Code-required hip and ridge ventilation
If your policy includes Ordinance or Law coverage (sometimes labeled Code Upgrade), the carrier pays for these on top of the RCV. The coverage is usually capped at 10 to 25 percent of your dwelling limit. For a $400,000 home that can be $40,000 to $100,000 of additional roof-related coverage available. Most homeowners never use it because no one tells them it's there.
I check Ordinance or Law on every estimate. If you have it, I write a supplement that itemizes every code-driven upgrade and submit it to the carrier alongside the original estimate.
What's a Supplement and Why Does It Matter?
A supplement is a written request to the carrier for items missing from the original adjuster's estimate. Adjusters work fast. They look at a roof for 30 minutes, photograph what they see, and write the scope from a vehicle. They miss things. Common missed items I write supplements for:
- Step flashing at walls and chimneys (almost always replaced on a tear-off, often skipped on the estimate)
- Pipe boots and rubber gasket boots
- Detach and reset of solar attic fans, satellite dishes, lightning rods
- Two-story or steep-pitch labor surcharges
- Decking replacement at rotten or damaged boards
- Code-required ridge venting upgrades
- Permit fees
- Detach and reset of gutters (if mounted to fascia we're replacing)
Supplements add an average of 10 to 20 percent to the original RCV in my experience. They are part of the depreciation conversation: every item added to RCV increases the recoverable depreciation amount, which means a larger second check.
Recoverable depreciation isn't a favor. It's money you've already paid for in premiums. The carrier holds it to enforce the replacement, not because you don't deserve it.
What If I Have an ACV-Only Policy?
Some Minnesota homeowners, especially on older homes, rental properties, or after a non-renewal forced them into a higher-deductible plan, have ACV-only coverage. There is no recoverable depreciation. You get one check and that's it.
How do you know? Look at the dwelling coverage section of your declarations page. If it says "Replacement Cost" or "RCV," you have the two-check structure. If it says "Actual Cash Value" or doesn't specify and the premium is conspicuously cheap, you may be ACV-only. Call your agent before a storm hits, not after.
If you're ACV-only, the gap between the ACV check and the cost of a real replacement comes out of your pocket. Often that's $8,000 to $15,000 on a Twin Cities home. It's worth paying the higher RCV premium for the protection.
Common Mistakes Minnesota Homeowners Make
Cashing the ACV Check and Doing Nothing
If you cash the ACV check, do partial repairs, and never replace the roof, the depreciation expires. You also have an underwriting problem. The carrier will note the open claim and may non-renew if they discover the work wasn't done.
Picking a Contractor Who Can't Document the Job
The depreciation check depends on documentation. If your contractor can't produce a clean final invoice, a Certificate of Completion, and material specs, the carrier may refuse to release depreciation. I've watched homeowners get stuck because their contractor disappeared after collecting the ACV check.
Letting the Contractor "Eat the Deductible"
Under Minnesota Statute 325E.66, it is illegal for a contractor to waive, rebate, or pay your insurance deductible on residential roofing work tied to a storm claim. Contractors offering to "cover" or "eat" your deductible are committing insurance fraud and you are signing your name to it. Walk away.
Missing the Deadline
I cannot fix a forfeited depreciation claim. Once the window closes, it closes. Mark your calendar the day the claim is approved.
Not Asking About Code Upgrades
If your adjuster's estimate doesn't have a line called "Ordinance or Law" or "Code Upgrade," that doesn't mean it's not on your policy. Ask your agent directly. If you have it, demand it be included.
Can I Use a Public Adjuster Instead?
Yes. A licensed Minnesota public adjuster represents you, not the carrier. They negotiate the settlement and supplements on your behalf in exchange for a percentage (typically 10 percent of the claim). On a $25,000 claim that's a $2,500 fee.
I work with several public adjusters across the Twin Cities. For straightforward claims under $30,000, a good contractor and a willing carrier can usually handle the paperwork without one. For larger losses, full hail with siding, windows, gutters, and complex code questions, a public adjuster often more than pays for themselves. See our page for public adjusters for the partners we recommend.
How Northern Forge Handles This for You
Every storm-damage roof I write goes out the door with the depreciation conversation already started. We:
- Pull your full insurance estimate before scheduling work.
- Identify any missing scope items and submit supplements before the work begins.
- Check your declarations page for Ordinance or Law coverage.
- Use Xactimate-compatible line-item pricing on your invoice so the carrier can match it.
- Issue a Certificate of Completion the day we sign off.
- Submit completion paperwork directly to the claim portal on your behalf.
- Follow up with the carrier on the depreciation release.
You don't need to know Xactimate or insurance language. You hired a contractor; you should get a roof and your full benefit. That's the job.
Frequently Asked Questions
What is recoverable depreciation in simple terms?
It's the part of your insurance claim the carrier withholds until you actually replace the roof. You get it as a second check once the work is done and the final invoice is submitted.
How big is the recoverable depreciation check usually?
On Twin Cities roofs, the depreciation is typically 25 to 50 percent of the total RCV, depending on the age and condition of the roof. On a $25,000 claim that's $6,000 to $12,500, real money.
Can I keep the recoverable depreciation if I do the work cheaper?
No. The carrier releases depreciation up to what you actually spent, no more. If the RCV was $25,000 and you found a contractor who did the work for $18,000, you only get depreciation up to the $18,000 actual cost. The rest is gone. (And a contractor that cheap probably isn't installing what the estimate covered.)
What if my insurance won't release the depreciation check?
Most denials come down to documentation. Make sure your contractor's final invoice itemizes scope, materials, and total paid, and that you've submitted a signed Certificate of Completion. If the carrier still won't release it, file a complaint with the Minnesota Department of Commerce, Insurance Division (mn.gov/commerce). They regulate carrier conduct in Minnesota.
Is recoverable depreciation taxable?
Insurance settlements that restore a damaged property to its pre-loss condition are generally not taxable. Talk to your CPA for your specific situation, but for an ordinary roof replacement claim there's no federal tax implication.
What if my roof is too old and the carrier says it's not worth replacing?
Insurance carriers cannot refuse to pay an approved claim because the roof is old. They can, however, depreciate it heavily, leaving you with a small ACV check and a large gap. Some carriers are also non-renewing policies on older roofs, which is a separate issue.
Can Northern Forge help me file the depreciation claim?
Yes, on every job. We provide the documentation the carrier requires, submit it through the claim portal, and follow up until you have the check in hand. There's no extra charge for it.
Open Claim? Let's Make Sure You Get Every Dollar
If you have an open hail or storm claim and you're not sure whether the settlement covers everything, send me the estimate. I'll review it, identify missing scope, and tell you what to ask the carrier for. No obligation, no sales pressure, straight read.
Northern Forge Construction is a Coon Rapids–based roofing contractor serving the Twin Cities metro. MN Licensed BC809688. Owner Luis Hernandez personally reviews every insurance claim and is on every job site. This article is informational and does not constitute legal or insurance advice. For specifics on your policy, consult your agent or the Minnesota Department of Commerce.