I’m not very familiar with how homeowners insurance claims work. I’m thinking about using a different contractor for my claim, and I submitted their estimate to USAA for review. The adjuster responded with this:
“If so, we can pay you directly, but the mortgage may be included on the check as well as recoverable depreciation. You can recover the depreciation when the repairs are completed.”
Can someone explain what this means in plain English? Thanks!
Sure, here’s how it works. If your claim is over $10k, they usually apply depreciation based on the age of what’s being repaired or replaced. After they take off depreciation, they subtract your deductible, and then you get paid what’s called the Actual Cash Value (ACV). Once the repairs are finished, you send the final invoice, and they’ll pay you the depreciation they originally held back.
If your payment is over $10k, your mortgage lender might also be listed on the check. They do this to make sure repairs are completed. They’ll check through a system to confirm.
@Lane
Thanks! My mortgage isn’t with USAA—it’s with a completely different lender. What happens then?
Evander_Mitch said:
@Lane
Thanks! My mortgage isn’t with USAA—it’s with a completely different lender. What happens then?
If your mortgage company is listed, you’ll need to contact their loss draft department. Let them know you have an insurance check for repairs. They’ll tell you what to do and where to send the check for their endorsement.
@Lane
Got it, thank you!
If your mortgage lender is listed on the check, you’ll have to contact their loss draft department. Every lender has its own process. Some will release the money in stages as work gets done, while others will just endorse the check outright. They’re listed because they have a stake in making sure the repairs are finished.
If you have a mortgage, the lender is probably listed on the check because they have a financial interest in your property. They want to make sure the repairs are done to protect their investment.
As for the payment, USAA likely calculated it using Actual Cash Value (ACV). This means they deducted depreciation (value lost due to age or wear and tear). The recoverable depreciation is the part you’ll get back once the repairs are completed.
This process helps ensure the money is spent on the repairs. When the work is done, submit proof (like an invoice or photos), and they’ll send you the remaining amount.
@Ezri
Thanks, that clears it up!