Understanding Homeowners Insurance Paperwork: Decoding Deductibles and Depreciation

Homeowners insurance is vital for protecting your home and belongings, but navigating the paperwork can be daunting. One key element to understand in your policy is the terminology related to deductibles and depreciation. Let’s explain what these terms mean and how they impact your coverage.


A deductible is the amount you pay out of pocket before your insurance coverage kicks in to cover a loss. For example, if you have a $1,000 deductible and experience a covered loss that results in $5,000 of damage, you would need to pay the first $1,000, and your insurance company would cover the remaining $4,000.

Recoverable Depreciation:

Depreciation refers to the decrease in the value of your property over time, typically due to wear and tear or age. Recoverable depreciation is the portion you can reclaim or recover through your insurance claim. This normally applies to items that can be repaired or replaced, such as damaged furniture or appliances. Once repairs or replacements are completed and receipts are provided to your insurance company, they may reimburse you for the recoverable depreciation amount.

Non-Recoverable Depreciation:

On the other hand, non-recoverable depreciation is the portion of depreciation that cannot be recovered or reclaimed through your insurance claim. This often applies to structural damage or permanent home fixtures that have depreciated over time. In such cases, your insurance company may factor in the depreciation when determining the payout for your claim, meaning you would receive a reduced amount based on the property’s depreciated value.

Understanding Your Policy:

When reviewing your homeowner’s insurance policy, it’s essential to understand the terms and conditions related to deductibles and depreciation. Be sure to review your policy documents carefully and ask your insurance agent or provider any questions to ensure you clearly understand your coverage.


Navigating homeowners insurance paperwork can be complex, but understanding terms like deductible, recoverable depreciation, and non-recoverable depreciation is crucial for making informed decisions about your coverage. By familiarizing yourself with these concepts, you can better understand how your policy works and ensure you have the protection you need for your home and belongings.