What is a non-recoverable insurance policy?

As a homeowner, you might assume that storm damage to your home is covered by your homeowners insurance policy. However, many homeowners are not aware that they have a non-recoverable insurance policy on their home. This means your insurance company will only pay an actual cash value payment (damages less the deprecation and minus your deductible). What this means to you is that you are out-of-pocket MORE than just your deductible when you file a claim. You will be responsible for your deductible AND the depreciation for full replacement.

Here’s an example:

Your home was damaged in a recent hail storm. The cost to replace your roofing system is $10,000. Your deductible is $1,000.

Since your damaged roof is 20-years-old, the insurance adjuster depreciated the roof 50%, so the actual cash value of the roof is now $5,000. This means the recoverable depreciation is $5,000 ($10,000 replacement value minus the $5,000 actual cash value).

The insurance company will initially make a payment to you for $4,000 (actual cash value of $5,000 minus your deductible of $1,000). You make your initial payment of $5,000 to 123 Exteriors to restore your home.

After repairs are complete, you would then get your second payment from the insurance company for the depreciation ($5000). However, because you have a non-recoverable insurance policy, your insurance company will only pay the actual cash value of $5,000. You are now responsible for the remaining $5,000.

Make sure you have a recoverable policy with no exclusions.

It is important to choose a contractor who is familiar with policy specifics and dealing with insurance companies. Often, we see that homeowners do not fully understand their insurance policy until we explain it to them. The team at 123 Exteriors works with you and your insurance company to restore your home to its original beauty.