Understanding Homeowner’s Holdback

“Holdback” refers to depreciate in replacement cost coverage. Insurance policies covering personal property replacement claims typically run on a “Replacement Cost” basis. This means that your insurance company will cover you for the amount of replacing or repairing each item of personal property that gets damaged.

For example, say you bought a bed 5 years ago. If a flood comes and destroys your bed beyond repair, the “holdback” would be the amount that the insurance company deducts to replace that item in today’s market, based on the age and condition that item was in before the flood. This amount, minus the “holdback” is the Actual Cash Value (ACV) of that bed.

What Impacts Your Replacement Cost?

There are several factors that could influence the replacement cost that and insurance company pays to replace damaged or destroyed property. These factors are the difference between a brand-new version of your personal property and the condition that your personal property was in before being damaged or destroyed.

Age of Your Personal Property

It’s the same thing you hear when you buy a car. The value of your car decreases when you leave the lot. This means that with each passing moment after you purchased your personal property, its value changes.

The age of your personal property with impact the ACV that an insurance company uses to determine how much to provide you with after your personal property is damaged or destroyed. A two-year-old laptop is not going to have the same value as a brand new one. A ten-year-old laptop is not going to have the same value as a two-year-old laptop. And, so on.


Depreciation shows the actual amount that is deduced from the original cost of that item. For example, if you bought a TV in 2008 that was then stolen, the depreciation would be the amount of money deducted from the determined replacement cost, based on the life expectancy of that item in regard to how long you’ve owned it for.

So, to get the insurance company to pay you the full amount without depreciation, you would need to have a Function Replacement Cost Provision in place with your insurance company that protects you in receiving the full amount for your personal property.

Personal Property Replacement Cost Without Holdback

So, how can you get the insurance to pay you a personal property replacement cost without holdback? If you do not want to receive a depreciated amount, or Actual Cash Value, for your personal property, you would need to have Endorsement replacement cost coverage with your insurance company. A Functional Replacement Cost Provision changes the ACV to valuation of replacing damaged property with something that serves the same function.

Not all insurance policies offer Replacement Cost endorsement. You should check with your insurance company and review your policy to make sure that you have this. If not, you may consider changing your insurance plans in order to have this. There are a variety of instances in which you might need this, including theft, floods, fire damage, and other natural disasters. Keeping all receipts can be crucial to having a public insurance adjuster help you recoup the losses you sustained.