What is 'recoverable depreciation' in a replacement cost claim?

In a replacement cost claim, the insurer often pays the actual cash value first (replacement cost minus depreciation), holding back the depreciated amount. That withheld amount is the 'recoverable depreciation,' which the insured can collect once they actually complete the repair or replacement and submit proof, bringing their total recovery up to the full replacement cost (subject to limits). This two-step process ensures the insured genuinely replaces the property rather than pocketing the full new-value payment for old property. Understanding recoverable depreciation — and how replacement cost settlements are paid in two stages — is important valuation content for adjusters.