How Homeowner’s Insurance Projects Work: Payments, Deductibles, and Depreciation

traverserenovation
Sep 25
3 min read

When your home is damaged by a storm, fire, or water, your first call is usually to your insurance company. But for many homeowners, the claims process can feel confusing. Who gets paid? How do contractors receive payment? What’s a deductible? And what in the world is depreciation?

At Traverse Renovations LLC, we’ve worked on countless insurance-related projects here in the Lehigh Valley, and we know how stressful it can feel. This guide explains the entire process step by step so you know what to expect.

What’s Covered by Homeowner’s Insurance?

Policies vary, but most cover:

Storm damage (wind, hail, fallen trees)
Fire and smoke damage
Water damage from sudden events (burst pipes, appliance failures — not flood without separate coverage)
Theft or vandalism

The key is always to check your policy and understand what is and isn’t included.

How the Payment Process Works

Here’s the typical flow of an insurance project:

Claim filed → Homeowner contacts insurance company after damage.
Adjuster inspection → Insurance adjuster inspects the damage and writes an estimate.
Initial check issued → Insurance company pays homeowner the Actual Cash Value (ACV) — the depreciated value of the damaged item.
Repairs completed → Contractor does the work as outlined.
Depreciation released → Once repairs are confirmed, the insurance company pays the rest (called recoverable depreciation).

Who Gets Paid?

Insurance companies almost always send the check to the homeowner (sometimes jointly with the mortgage company). The homeowner is then responsible for paying the contractor according to the signed contract.

At Traverse Renovations LLC, we set up clear payment schedules so you know exactly when each payment is due.

How Contractors Get Paid

Contractors don’t get paid directly by the insurance company. Instead, the homeowner pays the contractor in stages:

Deposit (often used to order materials)
Progress payment(s) (as work moves forward)
Final payment (once the job is complete and homeowner is satisfied)

This ensures both sides stay accountable throughout the project.

Deductibles

The deductible is the portion you must pay out-of-pocket before insurance covers the rest.

Example:

Roof damage repair: $10,000
Deductible: $1,000
Insurance pays $9,000; homeowner pays $1,000.

Contractors cannot legally “waive” deductibles. If one offers to do so, that’s a red flag.

Depreciation in Detail

This is the part that confuses most homeowners. Let’s break it down.

Replacement Cost Value (RCV): The cost to replace the damaged property today with new materials of like kind and quality.
Actual Cash Value (ACV): The RCV minus depreciation for age, wear, and tear.
Recoverable Depreciation: The difference that insurance holds back until you complete the work.

Example: Roof Replacement

Replacement cost (RCV): $20,000
Roof age: 10 years into a 20-year lifespan → 50% depreciated
ACV: $10,000 (first check from insurance)
Deductible: $1,000 (homeowner pays out-of-pocket)
Recoverable depreciation: $9,000 (paid after roof is replaced)

Final outcome: Insurance + homeowner = full $20,000 covered, less the deductible.

👉 In short: Depreciation is money the insurance holds back until you finish the work. With replacement cost coverage, you get it back; with ACV-only policies, you don’t.

How Homeowners Should Approach an Insurance Project

Call insurance immediately after damage.
Document everything with photos and videos before cleanup.
Get a detailed contractor estimate — make sure it lines up with the adjuster’s numbers.
Understand your deductible and set that money aside.
Stay organized with paperwork, checks, and receipts.
Choose a reputable contractor like Traverse Renovations LLC, who knows how to navigate the process.

Final Thoughts

Homeowner’s insurance claims can feel overwhelming, but once you understand deductibles, depreciation, and how payments flow, the process is much simpler. The key is to work with a contractor who explains everything clearly and puts the contract in writing.

At Traverse Renovations LLC, we’ve helped many families in the Lehigh Valley repair storm damage, fire damage, and water damage through insurance projects. We make sure homeowners know exactly where their money is going and how insurance funds are applied — no surprises, just honest, quality work.

If you’ve had unexpected damage to your home and aren’t sure where to start, give us a call. We’ll walk you through the insurance process and get your home back to normal, step by step.