We’re all familiar with the concepts of depreciation and insurance, but depreciation insurance is something that many businesspeople are woefully ignorant of. Whether you’re concerned about getting the full value on the equipment insurance at your business or you want to maximize the value of your homeowner’s insurance, this is a concept everyone should be familiar with.

According to J.D. Howard, founder of the Insurance Consumer Advocate Network, more and more insurance companies are withholding depreciation insurance as claims become more expensive. Howard believes it creates “hoops” for consumers and business owners to jump through.

Depreciation insurance applies to replacement value policies in which an insurer will pay the total value of replacing whatever good is lost. The company will assess the damage, find out the replacement cost of the item and mail a check for that amount (minus your deductible).

Straightforward enough, right? Not quite.

In addition to your deductible, the insurer can withhold an amount (known as recoverable depreciation) until you prove that you have replaced the good or made the necessary repairs. Once you prove that you have made the replacement, the company will mail you the recoverable depreciation. The insurance company’s hope is that this burden of proof will be enough to deter a lot of clients from recovering the total value of their policy.

In order to recover the total value of your insured goods, make sure you review the language of the policy. Different contracts might have different names for this withheld amount including “recoverable depreciation,” “depreciation,” and “guaranteed replacement cost coverage.” Make sure you speak to the insurance agent and are clear on everything that must be submitted in order to recover the depreciation.

If you know all the information and documentation you need to recover the depreciation, it becomes much easier to collect these items in the event of a loss. This information can include everything from receipts to before and after pictures. Recoverable depreciation is usually forfeited after 180 days so make sure to act quickly.

Recovering the money that is rightfully yours is not difficult but it is an extra step in the process. If you do not hesitate in collecting the documentation you need, recovering the withheld depreciation from your insurance company can be a cinch.