What is Depreciation? Understanding How it Affects Your Insurance Claim
An overview of how depreciation happens and the ways a public insurance adjuster can help with a property loss.
Local Insurance Pros
A Simple Guide to What Depreciation Means and How Public Insurance Adjusters Help You Get Paid
Have you ever heard the word depreciation? It might sound tricky, but it’s actually easy to understand. Depreciation means that things lose some of their value as they get older or get used a lot. Think about your backpack or your bike—you know they are not as shiny and new as when you first got them. They aren’t worth the same amount anymore. That’s depreciation!
What is Depreciation in Insurance?
When something in your home gets damaged—like your roof, computer, or furniture—and you make an insurance claim, the insurance company needs to decide how much money to give you. They don’t just pay you the full price you paid when the item was brand new. Instead, they use depreciation to figure out what the item is worth right now when it was damaged.
For example, if your roof is 10 years old and it usually lasts 25 years, it has lost some of its value because it’s getting older and worn out. So, the insurance will pay you the current value, not the full price to buy a brand-new roof. This current value is called the actual cash value.
When and How is Depreciation Applied?
Depreciation is used when insurance pays you for the actual cash value of your damaged property first. You get money based on how old the item is and how long it was expected to last. If your policy has something called replacement cost coverage, you might get extra money later to help you buy a brand-new item, but only after you show proof that you replaced the old one.
Usually, you get two payments:
The first payment is for the value of your old item (after depreciation).
The second payment is given when you fix or replace the item and send the bills to your insurance company.
How Can a Public Insurance Adjuster Help?
Dealing with insurance claims can be confusing. This is where a public insurance adjuster comes in. They work for you, the homeowner, not the insurance company. Their job is to help you understand what your insurance policy says, check the damage carefully, and make sure you get all the money you deserve.
Public adjusters know how depreciation works and can explain it in a way that’s easy to understand. They also negotiate with the insurance company, so you get a fair settlement. If the insurance company doesn’t want to pay for something or pays less than they should, the public adjuster is there to support you and fight for a better payout.
Depreciation means your damaged things lose value over time, and insurance pays you according to that value. But with the help of a public insurance adjuster, you can make sure you get the best possible claim payment to fix your home and replace your things.
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