How to Make Your Insurer Show Its Depreciation Math
The estimate arrived with a number at the bottom that was thousands lower than you expected, and a line called depreciation explaining the gap. You are entitled to see how that number was built.
Depreciation Is a Calculation, Not an Opinion
Actual cash value is replacement cost minus depreciation. That formula is simple. What is not simple is how a specific carrier decided your fifteen-year-old architectural shingles had lost a specific percentage of their value, and whether that percentage was applied to labour as well as materials.
Homeowners tend to treat the depreciation figure as a given. It is not. Ohio's claims rule treats it as something the insurer has to be able to show its work on.
What Ohio Requires on an ACV Settlement
Where a fire and extended coverage policy settles losses on an actual cash value basis, Ohio Administrative Code 3901-1-54 says two things that are worth knowing word for word.
- Sales tax is part of the calculation. The insurer determines actual cash value by taking the replacement cost of the property at the time of loss, including sales tax, and subtracting depreciation. Tax is not a separate favour applied later.
- You can demand the breakdown. Upon the insured's request, the insurer shall provide documentation detailing all depreciation deductions. Not a summary. All of them.
What to look for once you have it
A depreciation worksheet is usually an estimating-software export with a column showing age, life expectancy, condition, and a percentage per line item. Read it for these things:
- Depreciated labour. Whether labour should be depreciated is a genuinely contested question and varies by policy and carrier. It is worth identifying, because on a roof it is a large share of the total.
- Life expectancy assumptions. A 30-year architectural shingle depreciated on a 20-year schedule produces a much larger deduction. The assumed life should be defensible for the product actually on your roof.
- Depreciation on items that do not age that way. Tear-off labour, dumpster fees, permit costs, and underlayment are frequently depreciated by default even where the logic is thin.
- Condition adjustments. Some worksheets apply an extra condition penalty on top of age. If yours does, ask what it was based on.
How to ask
Keep it short and put it in writing. Please provide documentation detailing all depreciation deductions applied to this claim, as provided for under Ohio Administrative Code 3901-1-54. That is the whole email. Under the same rule your carrier owes you a response within fifteen days.
Depreciation You Get Back, and Depreciation You Do Not
On a replacement cost policy, most depreciation is recoverable. The carrier holds it back until the work is actually done, then releases it once you submit the final invoice. That is the second check, and a surprising number of homeowners never claim it.
Non-recoverable depreciation is different. It is gone regardless of whether you do the work, and it usually shows up because of a roof payment schedule or an actual cash value endorsement rather than because of the estimate itself. Your declarations page tells you which one you have, and that is worth checking before a storm rather than after.
Why the Number Feels Worse in Columbus Right Now
Central Ohio carriers have been tightening roof settlement terms since the run of severe storm years. More policies now depreciate roofs from an earlier age, and more of them carry payment schedules that reduce the covered percentage as the roof gets older. The estimate arithmetic has not changed. The inputs have.
That makes reading the worksheet more valuable than it used to be, not less. A depreciation figure built on the wrong shingle life expectancy is worth challenging politely and in writing before you accept the settlement.
We look at these worksheets every week. If you want a second set of eyes on yours, call (877) 521-7171 — there is no charge and no obligation attached to it.
Not Sure Where Your Claim Stands?
We inspect the roof, document what is actually there, and tell you honestly whether you have a claim worth filing.
Common Questions
Yes. Ohio's claims rule states that on an actual cash value settlement, the insurer shall provide documentation detailing all depreciation deductions upon the insured's request. Ask in writing and keep the date.
Under the Ohio rule, actual cash value is determined from the replacement cost of the property at the time of loss including sales tax, less depreciation. If tax is missing from the calculation entirely, that is worth raising.
It depends on your policy language and your carrier's practice, and it is a genuinely disputed area. The first step is simply identifying whether it happened, which the depreciation breakdown will show.
Recoverable depreciation is released to you after the work is completed and invoiced. Non-recoverable depreciation is withheld permanently and usually comes from a roof payment schedule or an ACV endorsement on your policy.
It should not. Your carrier owes a response to communications within fifteen days under the same rule, and the request does not change the claim decision timeline.
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