Resources · Depreciation
Depreciation is the argument where both sides already agree on everything else. They agree that the roof belongs in the loss. They agree on what it costs to put back. And they still land a long way apart, because the last step is a judgment that arrives in the form of arithmetic.
On an exterior file, and on a hail file especially, the depreciation judgment is frequently where the real money sits. Depreciation arrives at the end as a subtraction, and the reasoning behind the figure is rarely set out on the estimate.
So that's what this page covers. How the number gets built, and which half a panel can decide.
This page is an informational overview of how depreciation gets applied to a property loss. It isn't legal advice, and your policy's exact language controls everything described below. Ironclad Assessment Group serves as a neutral appraiser and umpire. We're not a public adjuster, and we don't adjust, negotiate, interpret your policy, or settle your claim.
Start with replacement cost, the figure for doing the work now, at what tear-off and installation cost in Columbus this year rather than a national average.
Then age enters. The roof's age gets set against how long that kind of product is expected to last, the spent share comes off, and what's left is actual cash value. The arithmetic is simple.
The trouble sits upstream. Every input is a choice somebody made. The service life assigned to that product (which isn't automatically the warranty term on the wrapper), the condition somebody recorded while standing on it, and the age itself.
Condition gets written down as a rating, and two people on the same roof can code it differently in good faith. Age comes from a permit, an invoice, a homeowner's memory, and sometimes from nothing at all.
So two careful estimators can produce different figures from the same roof without either doing anything wrong. The arithmetic is objective. What goes into it isn't.
Two roofs go on in the same week. One faces south with sun on it all day, over an attic where the soffit intake got painted shut. The other runs north under mature trees, with ridge and soffit ventilation working. Ten years on, the calendar says they're the same age. Nothing else does.
Chronological age is what the paperwork says. Effective age is how much life the thing has actually spent, read off the roof rather than off a date.
The evidence is ordinary. An estimator reads whether the tabs are still sealed or have released along a rake, how much granule cover is left, and what shape the pipe boots are in.
And the concept cuts both ways. A carrier's estimator can reasonably record a roof as further along than the permit suggests. An owner's appraiser can reasonably record it as behind its date. Neither reading is a trick.
This is the part careful people genuinely disagree about. Both positions are worth setting out properly.
One starts from what was actually lost. It wasn't a stack of bundles sitting in a driveway. It was an installed roof, and the installation is part of what made it a roof. On that reading, the installed item had used part of its life by the morning of the storm, and carrying labor at full value pays new for something consumed years ago.
The other starts from what depreciation measures. It measures wear on property, and labor isn't property. It's a service, consumed the day it's performed, and it doesn't age afterward. A tear-off crew charges this year's rate whether the roof went on eight years ago or eighteen, so cutting that rate for the age of what it replaces subtracts from something that never wore out.
Practice isn't uniform. Some estimates depreciate the installed line whole. Others depreciate the material and carry labor at full value. Some policies also say something about how actual cash value is determined, and where the wording is doing the work, that's interpretation rather than valuation. It belongs with a policyholder-side insurance attorney.
This page isn't going to settle it, and pretending the question has one answer would be dishonest.
Not every line gets treated the same way, and conventions vary by carrier and by the person writing the estimate. Treat what follows as tendencies rather than rules.
Some items are commonly carried at full value. Debris removal and disposal is one such line, commonly carried on the reasoning that it's a service performed once rather than an asset with life left in it.
A roof also isn't one thing with one age. The field shingles, the ridge cap, the pipe boots, the drip edge, and the gutter runs wear on their own schedules. Some estimates separate them. Others apply one figure across the roof section.
That cuts both ways. A blanket figure can overstate the wear on a component that went on recently and understate it on one older than the roof around it. Depreciation isn't one decision but a series of them.
Recoverable and non-recoverable depreciation are defined on the glossary page. What that doesn't cover is the practical shape of it.
A held-back amount is contingent. It's commonly payable once the work has been completed and documented, usually with an invoice. Policies commonly put a time limit on it, and if the work never happens, the held-back amount commonly isn't paid. Whether that describes a particular policy depends on its wording, and reading it is work for a policyholder-side insurance attorney.
A homeowner feels that in an ordinary way. The first payment is built on the depreciated figure while the contract gets signed at the full one, and the gap sits with the household until the holdback is released.
The amount of depreciation applied is part of the amount of loss, which puts it inside what an appraisal panel decides. How much life the roof had spent, what condition it was in, what service life the product should carry, and how depreciation got spread across the components are all valuation questions.
What a panel doesn't decide is what your policy says. Whether a roof payment schedule or a similar endorsement applies to yours is one of those policy-language questions, and so is whether roof surfacing on it is written on an actual cash value basis. Reading those words is interpretation. Appraisal decides the amount of a covered loss, not whether a loss is covered.
A panel can decide that a roof had spent less of its life than one estimate assumed, and it can decide the opposite. It has no authority to decide that a provision limiting the payment doesn't apply. That one belongs with an attorney.
Where depreciation is the disagreement, what moves a file is a valuation that shows its own inputs. That means the service life relied on and its source, the condition recorded with photographs behind it, and whether labor was depreciated, each stated rather than buried in one percentage.
Two appraisers working from stated inputs can usually find the point where the two valuations diverge, often a single assumption. An umpire deciding what's left can see what each side did and why.
Our fee is set in writing before the engagement begins and never depends on the size of the award. That's what keeps the number credible. Nobody bought it. What we do as appraiser and umpire is laid out on the services page.
Yes. The amount of depreciation applied is part of the amount of loss, so it's inside what the appraisal clause was built for, and a panel can move it in either direction. What sits outside a panel's reach is whether your policy holds depreciation back at all and whether it's recoverable.
The common method starts with the replacement cost of the work. The roof's age gets set against the service life assigned to that product, and the share already spent comes off. The arithmetic is simple. The inputs aren't, because the service life assigned and the condition recorded are both judgment calls.
That one is genuinely argued. One position holds that what was lost was an installed roof, so the installed line had already used part of its life. The other holds that labor is consumed when performed and doesn't age, so a cost bought new shouldn't be reduced for the age of what it replaces. Practice isn't uniform, and nobody should hand you a confident answer.
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