"Depreciation" is funds the insurance company withholds from you after they have adjusted your claim. Most people have "replacement cost value policies," which means that they receive the "depreciated" funds in the form of a second check from their insurance company upon completion of the work.
There are multipe reasons why your insurance company withholds these funds:
- Your insurance company wants to be sure you actually have the work performed.
They will not give you all the money owed to you unless they receive a completed invoice from a contractor. - Your insurance company will pay you only for what you spend.
Your policy states that your insurance company will only pay you "up to what you spend." - You are responsible for the first portion of your claim. This is called "deductible."
By withholding monies allotted to you, your insurance company ensures that you actually pay your deductible. By not releasing funds until they have a final invoice from a contractor, they see what monies you actually spent and ONLY pay you up to that amount, less your full deductible.
Since this is how replacement cost value policies are set up, you should choose your contractor based upon:
- Quality of workmanship — Are they factory certified to install your roof?
- Dependability — Will they be around for years to service your warranty?
- How your property will be taken care of — Will they address all your damage?
- What type of warranty will you have when the job is completed — Does the warranty cover leaks and any interior damage caused by the leak?
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