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Last Post 04/09/2009 1:15 PM by  BobH
ESTIMATING AND DEPRECIATION
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TomS
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04/09/2009 10:19 AM
    Gentlemen,
    In the course of numerous conversations as well as numerous opinions, I have come to the place for my answer.
     
    Couple of simple questions, I believe.
     
    1) Gable roof (frt &  rear slope) hail damages entire roof for replacing same.  Depreciation is applied??
    2) Gable roof (FRONT) slope is damaged making it necessary for replacing.      Depreciation or is this repairs??
     
     
    Each company instructs in different ways, but my answers are just what you would consider without instructions, etc
     
    Thanks guys,
     
    TS
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    Ray Hall
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    04/09/2009 12:09 PM
    When this question comes to mind, use the word betterment instead of depreciation and the anwser will not be as fuzzy.
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    HuskerCat
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    04/09/2009 1:02 PM
    Think of a slope as a car fender.  Are you pounding out the dent (repairing), or replacing the entire fender?  Most times, replacement is--and repair is not--subject to depreciation or betterment.  And many HO policies state that if the total RC is under $2500, it will be paid at RC value without depreciation or betterment applied to the loss settlement. 
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    BobH
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    04/09/2009 1:15 PM
    Posted By TomS on 09 Apr 2009 10:19 AM
    Each company instructs in different ways...
    Yeah, that is the key right there.  My "standard procedure" would be:
    1. Always depreciate roof replacement
    2. Depreciate replacement of an entire slope (your example would be a large slope, maybe 1/2 the house)
     
    But there are exceptions to #2 and some carriers will consider it a "repair".  I just had that happen last month.  But most will consider it a "replacement" of that entire slope and depreciate it. 

    I consider a repair to be a "patch" and replacing a large gable slope is not a patch, and should include the ridge as a separate line item if the slope on the other side of that ridge is not damaged or being allowed for.
     
    Posted by Ray
    When this question comes to mind, use the word betterment instead of depreciation and the anwser will not be as fuzzy.
    Exactly.  If we patch some isolated shingles that blew off along the eve, we have not really extended the life of that roof.  No betterment.
     
    If we replace 1/2 the roof and a few years later they guy decides to replace the aging shingles on the rear slope of the gable, he doesn't have to do the front 1/2 so his condition is improved.  Same with fencing, don't depreciate isolated repair (but if you are replacing an entire run, that is a region that won't have to be done when the rest of the old fence falls down).
     
    Not to split hairs, but some people define "betterment" as a scenario where Like Kind and Quality replacement is not available so the claim is settled on the basis of improved or updated property.  The guy's TV is no longer available, so the one with added features becomes the basis of the claim.   That is not what we are talking about here, our focus is Like Kind and Quality replacement.
    Bob H
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