Deductible, Depreciation and What You Actually Receive
Your first cheque is usually the replacement cost, minus depreciation, minus your deductible. You get the depreciation back later — but only if you complete the repairs and claim it before your policy's deadline.
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Colorado Springs
What will I actually receive?
Start with the shape of it, because the first payment surprises almost everyone.
Replacement cost value (RCV)
is what it costs to replace the damaged property new. That is usually the headline number on the estimate.
Actual cash value (ACV)
is RCV minus depreciation — what the used item or material was worth immediately before the loss.
Your first payment is typically ACV, minus your deductible
Not RCV. If your estimate says one thing and your cheque says considerably less, that gap is almost always depreciation plus deductible rather than an error.
If your policy settles at replacement cost, the withheld depreciation is recoverable — it comes as a second payment after the repairs are done. If your policy settles at actual cash value only, it does not come at all.
The first question to ask your adjuster is therefore not "how much" but "is this policy ACV or RCV?" That single answer changes everything downstream.
Call (719) 618-9013. Read us the estimate and we will tell you what the payment structure is likely to be.
Call (719) 618-9013Insurance
How does the deductible actually work?
It comes off the settlement, not off the top of the repair.
The deductible is your share of the loss. The carrier subtracts it from what it would otherwise pay. You still owe the full cost of the repair to whoever performs it — the deductible is simply the portion you fund yourself.
Two points people get wrong regularly:
It applies per claim, not per year
Two separate water losses in one year usually means two deductibles.
Nobody can lawfully make it disappear
A contractor offering to "waive your deductible," "eat the deductible," or inflate an invoice to cover it is proposing to misrepresent the loss to your insurer. Whatever it is called, walk away.
Insurance
Do I have one deductible, or two?
Almost certainly two, and in Colorado this is the section that costs people the most.
Colorado homeowners policies typically carry a standard all other perils deductible plus a separate wind and hail deductible — and the second is substantially larger. Wind and hail are usually bundled, so a claim for either triggers the same deductible.
Why this lands on water damage claims: the two-stage loss. Hail opens the roof, the next storm brings water in, and the claim gets characterised as wind and hail. The interior water damage is then subject to the larger deductible, not the standard one.
Check your declarations page for both figures before you file anything. If the characterisation is arguable — a plumbing failure that happens to occur during storm season, say — that is a conversation worth having with your adjuster on day one rather than after the settlement arrives.
Insurance
How large is the Colorado wind and hail deductible, typically?
Larger than most people expect, and the structure has shifted.
Colorado is among the states with the highest wind and hail deductibles in the country. These are typically set either as a flat amount in the range of $2,500 to $10,000, or as a percentage of Coverage A — your dwelling limit — usually between 1% and 5%.
Most major carriers in Colorado have moved off flat-dollar amounts onto percentages. Many now require a minimum of 1% or 2%, and that is applied particularly along the I-25 corridor, in metro Denver and in the foothills. Colorado Springs sits on the I-25 corridor.
For scale: the average wind and hail deductible in Colorado is reported at around $5,664, against an average dwelling coverage of about $431,130 — roughly 1.3%.
The practical consequence of a percentage deductible is that it grows with your home's value. On a dwelling limit of $500,000, a 2% deductible is $10,000 out of pocket before the carrier contributes anything. Homeowners who last read their policy when it was a flat $1,000 are frequently unaware of this until they claim.
The underlying reason is straightforward. Hail accounts for 26% to 54% of a Colorado homeowner's premium depending on county, and roughly 50% along the Front Range, according to the Colorado Division of Insurance's February 2026 analysis of data covering about 80% of the market across 11 counties. Carriers have shifted more of that exposure onto the deductible.
Insurance
Can I do anything about a percentage deductible?
A few things, all worth asking your agent about — before a loss rather than after.
Deductible buy-down options
exist with some carriers and through some specialist products. They raise your premium in exchange for a lower out-of-pocket figure at claim time.
Compare the trade honestly
A lower deductible costs more every year whether or not you claim. Whether that is worth it depends on your risk tolerance and how much cash you could raise quickly.
Know the figure now
The worst version of this is discovering a five-figure deductible while standing in a wet basement.
Ask whether the percentage applies to the dwelling limit or the loss amount
It is normally the dwelling limit, which is why it can exceed the value of a moderate claim entirely.
We do not sell insurance and have no interest in which way you go. But knowing the number before you need it is free.
Water on the floor right now?
Tell us where it came from and how long it has been there. We will give you a time, not a window.
Call (719) 618-9013Coverage
What is recoverable depreciation, and how do I get it?
This is the mechanic that costs homeowners the most money through simple non-action.
If your policy settles at replacement cost, the carrier pays ACV first and withholds the depreciation. That withheld amount is recoverable depreciation — often called the second cheque or the holdback.
You receive it after the repairs are actually completed and you have submitted the invoices. Three things follow:
- 1
The first payment will look too small
That is the design, not a mistake.
- 2
If you do not complete the repairs, you do not get the holdback
Depreciation is only recoverable against work genuinely done and documented.
- 3
There is a deadline
Policies commonly require repairs to be completed and the holdback claimed within a period often falling between 180 days and one year from the date of loss. Miss it and the money is simply gone.
Ask three specific questions and write the answers down: how much is being withheld, exactly what documentation releases it, and what the deadline is.
If the repair will run past the deadline for a legitimate reason — a contested supplement, contractor availability, a long-lead material — ask in writing for an extension before the date passes, not after.
Colorado Springs
A worked example of the arithmetic
These are round illustrative numbers chosen to show the maths. They are not a claim about what any repair costs in Colorado Springs.
Call (719) 618-9013Suppose the estimate to repair a water-damaged room comes to $10,000 RCV. The adjuster applies $2,000 of depreciation to the materials, and your all-other-perils deductible is $1,000.
| Step | Amount |
|---|---|
| Replacement cost value (RCV) | $10,000 |
| Less depreciation | −$2,000 |
| Actual cash value (ACV) | $8,000 |
| Less deductible | −$1,000 |
| First payment to you | $7,000 |
You then have the work done. It costs the estimated $10,000. You submit the completed invoice.
| Step | Amount |
|---|---|
| Recoverable depreciation released | $2,000 |
| Total received | $9,000 |
| Your net out of pocket | $1,000 — your deductible |
If you never complete the repairs , you keep the $7,000 and forfeit the $2,000. Your net position is worse and the damage is still there.
Now run the same loss as a hail-characterised claim with a 2% wind and hail deductible on a $500,000 dwelling limit — a $10,000 deductible. The ACV is $8,000, the deductible is $10,000, and the claim pays nothing at all. That is not an unusual outcome in this state, and it is why knowing which deductible applies matters before you file.
Coverage
What is non-recoverable depreciation?
Depreciation that you will not get back, whatever you do.
It appears in two situations:
Your policy is actual cash value rather than replacement cost
Some policies are written this way overall; others apply ACV settlement to specific components, most commonly roofs beyond a certain age. Check your declarations and endorsements.
The item is not repaired or replaced
Recoverable depreciation is recoverable against completed work. Contents you choose not to replace generally settle at ACV.
Roof schedules are worth specific attention in Colorado. Some policies apply a depreciation schedule to roofing based on age, meaning an older roof settles at a materially reduced figure even on an otherwise covered claim. Given how much hail exposure sits in Colorado premiums, this is a clause worth reading before the storm rather than after.
Colorado Springs
When do I actually get paid?
Usually in two or three stages, and the third one catches people out.
- 1
The ACV payment
after the adjuster's estimate is agreed. This is your working capital for the repair.
- 2
The recoverable depreciation
after completion and submission of invoices.
- 3
Any supplement
if additional damage is found once material comes out — which on water losses is common rather than exceptional.
If you have a mortgage, expect the lender to be named on the cheque on anything beyond a modest amount. That means endorsing it to them, and them releasing funds in stages against inspections. It is normal and it adds time. Call your servicer early and ask what their process and thresholds are, because that timeline often determines when your contractor can start.
Pricing
What if the repair costs more than the estimate?
That is a supplement, and on water damage it is routine rather than adversarial.
The full extent of a water loss is frequently only visible once material is removed — wet insulation behind a wall, staining on framing, growth in a cavity nobody could see. A supplement is a request to add scope, supported by documentation.
What makes a supplement succeed: photographs of what was found once the wall came out, moisture readings that map the wet area, and a line-item revision rather than a request for "more money."
What makes it fail: raising it after the work is done, with no photographic record of what was behind the material that has now gone in a skip.
Pricing
The mistakes that cost the most
Six, roughly in order of how much money they lose.
- 1
Not completing repairs, and forfeiting the holdback
The single most common way homeowners leave money with the carrier.
- 2
Missing the deadline to claim recoverable depreciation
Ask what it is on day one.
- 3
Not knowing which deductible applies
until after the settlement is calculated.
- 4
Accepting the first cheque as final
when the policy is replacement cost and a holdback exists.
- 5
Failing to document what was behind the wall
which makes a supplement unwinnable.
- 6
Agreeing a number verbally
before reading the line-item estimate.
None of those are about arguing harder. They are about knowing the structure.
The process
What happens when you call
- 1
Read us the estimate
the line items, not the summary — and we will tell you what the payment structure is likely to be.
- 2
We will tell you whether the scope looks complete
for the loss you are describing, including when it looks reasonable.
- 3
We produce the moisture log and photographic record
as part of mitigation, which is what a supplement is built from. You get a copy either way.
Call (719) 618-9013 — Colorado Springs and El Paso County, 24/7.
Call (719) 618-9013FAQ
Frequently asked questions
Why is my first insurance cheque so much smaller than the estimate?
Because it is almost certainly the actual cash value payment — replacement cost minus depreciation — with your deductible taken off as well. If your policy settles at replacement cost, you recover the withheld depreciation as a second payment once repairs are complete and invoices submitted.
Do I have to use the insurance money on the repair?
If you want the recoverable depreciation, effectively yes — the holdback is released against completed, documented work. If there is a mortgage on the property, your lender will usually have requirements about how funds are used and released.
Can a contractor waive my deductible?
No. Any arrangement to absorb, waive or inflate an invoice to cover a deductible involves misrepresenting the loss to your insurer. It puts your claim at risk regardless of who suggested it.
Which deductible applies to water damage from a hail-damaged roof?
Frequently the wind and hail deductible, because the originating peril was the storm. That is usually the larger of the two in Colorado. Ask your adjuster which one they are applying and why, on the first call.
What if my deductible is bigger than the loss?
Then the claim pays nothing, and filing it may still put a claim on your record. With percentage-based wind and hail deductibles common in Colorado, this happens more often than people expect. Ask for the likely settlement figure before deciding to file.
Does depreciation apply to labour as well as materials?
Practice varies between carriers and it is a legitimate question to ask. Ask your adjuster directly whether labour has been depreciated in your estimate and, if so, on what basis.
Call (719) 618-9013 — 24/7, Colorado Springs and El Paso County.
Call (719) 618-9013This resource has been compiled and reviewed under the ANSI/IICRC S500 Standard and Reference Guide for Professional Water Damage Restoration, Colorado Department of Regulatory Agencies (DORA) insurance requirements, and El Paso County regional building codes. For on-site moisture assessments in Colorado Springs, call (719) 618-9013.