How it works
Under a replacement cost policy, the carrier typically pays the ACV first and holds back the depreciation until you complete the repairs and submit invoices. The holdback is released when documented repair costs are submitted.
Example
A roof with $15,000 replacement cost and $8,000 ACV: the carrier initially pays $8,000 (the ACV) minus your deductible. You spend $15,000 on repairs; the remaining $7,000 depreciation is released as the holdback payment.
Why it matters
Many homeowners don't realize the holdback exists. They receive the ACV payment, assume that's the settlement, and don't pursue the depreciation. The carrier keeps it.
What to do
Always submit completed-repair invoices to the carrier. Keep timestamps, contractor signed contracts, and photographs. The holdback is yours once repairs are verified.