How depreciation reduces payouts
Example math
- Replacement cost: $25,000 roof
- Age: 15 years
- Useful life: 25 years
- Depreciation: (15/25) × $25,000 = $15,000
- ACV: $10,000
- RCV holdback: $15,000 (released on repair)
Useful life standards
- Shingle roof: 20-25 years
- Tile roof: 40-50 years
- Metal roof: 40-60 years
- HVAC: 15-20 years
- Water heater: 10-15 years
- Hardwood floor: 30-50 years
Where abuse happens
- Useful life underestimated
- Condition ignored (well-maintained shouldn't depreciate fully)
- Labor depreciated (disputed in Florida)
- No RCV holdback tracked or released
Florida labor depreciation
- Florida case law generally against depreciating labor
- Carriers sometimes depreciate anyway
- Challenge with citation to case law
- Win frequently on supplemental
RCV holdback
- ACV paid initially
- Holdback withheld
- Released on repair completion with receipts
- Often forgotten; policyholder must request
Maximum payout approach
- Challenge aggressive age assumptions
- Preserve RCV claim (submit receipts)
- Dispute labor depreciation
- Track holdback explicitly