What is withheld depreciation?
Most insurance policies that cover the policyholder for full replacement cost have a provision that the company can pay the actual cash value of the loss (replacement cost less depreciation) upon settlement. Once repairs are made or content items replaced, the depreciated amount may be given back to the policyholder by an additional payment. This practice is in place to guarantee that the loss damages are properly repaired or the content items are actually replaced, which is the main intent of insurance; to put you back in the same position you were in prior to the loss. Also, the underwriters are very interested to see that the risk is properly maintained and proper repairs are made.
