Whether or not you have replacement cost coverage in your insurance policy, the adjuster may estimate depreciation to calculate and estimate the "actual cash value" described in the policy.
In this insurance depreciation example, the thing was damaged when it was 2 years old, and currently costs 250 dollars to replace (including tax and delivery), and is in average condition. The adjuster might look up the lifetime and annual depreciation percentage from a table provided by the insurer:
|Age at time of loss (Years)||Total Replacement Cost||Expected Lifetime (Years)||Condition (E, Avg, P)||Depreciation Percent||Calculated Depreciation||Total Less Depreciation|
|2 ÷ 5||(40% of 250)||(250-100)|
In this example, the adjuster estimated the claim payment for "actual cash value" ("ACV") at $150. This is the depreciated value. A replacement cost policy, or replacement benefit under your policy, typically provides for a supplemental payment of the remaining $100 after proof of replacement with a contract, invoice or receipt.
This example is but one of many methods and examples, and each item of your claim will have its own depreciation calculation. Consult with your adjuster or other loss professional on the particulars of your claim, under your policy and the laws of your state.
Remember: The original adjuster's goal is to provide an estimate of damages payable under the policy. If you have additional information on value, condition, age, or replacement cost, you are entitled to provide support for this guidance to the adjuster, and you should.
For more information on how to prepare for an insurance claim, or assistance in the adjustment of insurance claims, please contact John Ruskin at the address or phone number, below.