Homeowners often lose money in otherwise valid claims because they treat claim payments as a single check instead of a staged cash-flow system.

Core Terms

  • RCV (Replacement Cost Value): estimated cost to replace with like kind/quality per policy terms
  • ACV (Actual Cash Value): typically RCV minus depreciation (subject to policy language)
  • Recoverable depreciation: the holdback potentially released after compliant completion documentation

Basic Cash-Flow Formula

A simplified model often looks like this:

Initial Payment ≈ ACV - Deductible

Final claim value may increase if supplements are approved and depreciation is released under policy conditions.

Example Scenario

  • Initial carrier scope (RCV): $24,000
  • Depreciation: $6,000
  • Deductible: $2,500

Estimated first payment:

  • ACV = $18,000
  • ACV - deductible = $15,500

If final approved scope increases and completion requirements are met, additional payments may follow.

Where Homeowners Get Trapped

1) Treating first payment as final settlement

Many files stall because no one runs a formal scope reconciliation.

2) Poor completion packet

Depreciation release often depends on clear final invoicing and proof of completion.

3) No supplement ledger

Without line-level tracking, approved deltas are easy to miss.

Colorado Timing Protections Worth Knowing

Colorado homeowner insurance statutes include several timing and process protections for policyholders, including policy-copy access rights and claim-handling requirements in specific scenarios.

For wildfire total-loss scenarios, statutes also include expanded timelines in qualifying cases. Even if your event is hail, these provisions are useful for policy literacy and long-tail claim planning.

Financial Control System for Homeowners

Maintain a live claim ledger with:

  • RCV (carrier)
  • RCV (contractor)
  • Approved supplements
  • Depreciation holdback
  • Payments received by date/check number
  • Remaining collectible amount

This converts confusion into arithmetic.

Depreciation Release Packet (Minimum)

  • Final signed contract and invoice
  • Material/labor evidence tied to scope
  • Completion photos by elevation/slope
  • Permit closeout evidence (where required)
  • Payment documentation and request letter

Advanced Tip: Scenario Planning at Renewal

Before storm season, run a deductible and cash-flow stress test:

  • Can you fund deductible immediately?
  • Can you bridge labor/material timing before full release?
  • Do you have contingency for supplement cycle time?

Financial readiness is as important as roof readiness.

Sources

Educational only. Payment structure and depreciation treatment are controlled by your exact policy language and applicable law.