You just suffered a loss to your home, automobile or other insured property. Thankfully, you purchased insurance on the property, so you filed a claim with your insurance company. To your shock, however, the settlement check was less than you expected it to be. Your adjuster explained your settlement is based on a depreciated value of your damaged property, and the compensation was reduced to reflect its age and condition, rather than its replacement cost. In some cases, you will be able to recover the depreciated value by following a few steps.
Read your insurance policy to verify you have replacement cost coverage. If you have an actual cash value policy, like most automobile policies, you cannot recover depreciated value.
Replace your damaged property. Your initial settlement check is designed to help finance these purchases.
Keep all receipts for your replaced property. Make copies of them and file them in a secure place.
Submit all your receipts to your insurance adjuster. He will send you another settlement check representing the difference between the replacement cost on the receipts and the initial depreciated settlement check you already received.
You can typically make multiple receipt submissions. If you cannot afford to pay out-of-pocket to replace your property, use the initial settlement check to replace as much as you can, and submit those receipts. Use the next settlement check to replace more property, then submit those receipts. Continue until all property is replaced.
If you do not replace your damaged property, you will not recover the depreciated value. The coverage is called replacement cost because the property must be replaced to receive the full benefit.