How a two-stage payment usually works

Estimate approved
The adjuster calculates the replacement cost of the repairs and subtracts depreciation for age and wear on items like roofing, flooring and cabinets.
First payment
The insurer pays the actual cash value: replacement cost minus depreciation and minus your deductible.
Rebuild underway
You and your contractor complete the work. Supplements may add scope and depreciation along the way.
Work completed
You send proof of completion and final costs to the insurer.
Second payment
The insurer releases the recoverable depreciation, up to what was actually spent and the policy terms allow.

Why this trips people up

The first check can look like the whole settlement, especially if it arrives with little explanation. Contractors may expect payment for completed work that relies on the second check, and owners may not realize they need to ask for it. Some policies also set a period within which repairs must be completed or the holdback claimed. Your policy and your adjuster can tell you what applies.

Depreciation is a calculation, and it can be discussed. If a ten-year-old roof was depreciated as if it were near the end of its life, or recently updated flooring was treated as original, provide the evidence: receipts, permit records, photos. Adjusters can and do revise depreciation when shown something concrete.

Preparing your depreciation claim

  • Get the estimate summary that shows replacement cost, depreciation and actual cash value for each line.
  • Ask the adjuster which depreciation is recoverable and which, if any, is not.
  • Ask whether there is a deadline to complete repairs or submit the claim.
  • Keep the final invoice, lien waivers and proof of payment from the contractor.
  • Include photos of completed work and the closed permit record.
  • Submit in writing and keep a copy with the date sent.

Common questions

Can I use the money to rebuild differently than before?

Often owners can make changes, but recoverable depreciation is usually tied to what was actually spent on comparable repairs. Discuss changes with your adjuster before committing.

Does contents depreciation work the same way?

Many policies treat belongings similarly, releasing the holdback when items are replaced. Ask your adjuster how your contents claim is handled.

General information for Westminster, not a quote or professional advice. In an emergency, call 911.