what is recoverable depreciation

Recoverable depreciation is a term used in home insurance policies to describe the difference between actual cash value (ACV) and replacement cost. ACV refers to the current value of an item, taking into account its depreciation over time, while replacement cost refers to the cost of replacing the item with a new one. Recoverable depreciation is the amount that can be recovered by the policyholder by providing proof that shows the repair or replacement of the damaged or stolen item. It is important to note that recoverable depreciation may become non-recoverable if certain policy clauses are not met or honored, such as a requirement for repair or replacement by a set deadline. Non-recoverable depreciation refers to the actual current cost value of an item and reflects the loss in its value as it is used over time. If a homeowners insurance policy covers only non-recoverable depreciation, the policyholder will be reimbursed only for the items current value, not its replacement cost.