Understanding Hold Back for Depreciation in Insurance Claims

by Jan 31, 2023

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The #1 reason to insure with a premium contract!

In previous issues of our blog, we have written about the benefits of selecting a premium insurance contract (written by a company like Chubb), over a basic policy underwritten by the vast majority of insurance companies that you listen to advertising on your television.

“Benefits of selecting a premium insurance contract”

Understanding Hold Back for Depreciation in Insurance Claims - Shepard Insurance Group

Hold Back!

What is that?

If you are one of the unfortunate homeowners who suffer a measurable claim on your house, hold back is the term used to identify the value the insurer retains while you rebuild the damage to your structure or replace the contents lost. This is contract language that comes with the “limited replacement cost” endorsement found in a basic home insurance policy.

We are now advising an individual with a basic policy insurer where the claim damage is $300,000. The depreciation holdback is 40% of that number. So instead of receiving a check for $300,000 as you would with a premium contract (like Chubb), the insured receives $180,000 as the initial payment on the claim ($300,000 minus 40%), with the balance paid when the property is fully repaired and inspected.

So, the insured is going to have to put up $120,000 in savings to finalize the repairs, which will be reimbursed when the repairs are complete. The insured is financing 40% of the claim recovery. Improvements during the repair of the property are not insured and only involve one more complication in getting paid.

If you would like to discuss the differences in a basic home policy and a premium contract, drop Kyle an email at or call 203.698.9342

Written by: Kyle Shepard

Kyle’s extensive sales and account management expertise transcends both Commercial and Personal Lines. Coupling that with his finance and life insurance licenses, Kyle serves as full service insurance agent for all of his valued clients. The goal for Kyle is to provide tailored risk management to address his client’s current and future exposures, and to optimize wealth preservation.

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