Depreciation is the decrease in the value of an insurance claim based on the age of the items that were damaged during the loss. This means that it is the cost of what the insurance company believes to be what your items in your home were valued at prior to the damage to your home. This is an important aspect of the insurance claim process as the insurance company may not accurately price your lost items properly. It is vital to have a public adjuster when you have depreciation insurance claims in RI.
How Is My Depreciation Calculated In My RI Insurance Claim?
One of the most complicated aspects of a property damage claim is the payment structure. The payment structure starts with the replacement cost value or RCV. This is the amount of money that the insurance company believes that it will cost you to repair your home. They then depreciate based on the age of the items and parts of the home that were damaged. That brings you to your actual cash value or ACV for short. This is what they believe everything was worth at the time it was damaged. They then take off the deductible and that leaves you with your net claim which will be the amount of your insurance check. Each insurance company has formulas that it will use and the majority of them revolve around both age and life expectancy.
How Is My Depreciation Recovered?
Whether or not depreciation is recoverable is determined solely by the policy. Most policies do have recoverable depreciation, however, some do not. In order to recover the depreciation, homeowners must prove two things: they must first prove that they have incurred the cost of the actual cash value or the claim which is a combination of both the net claim and the deductible, then they must prove that they need a portion or all of the depreciation funds in order to complete the project. In order to do that they could provide invoices from contractors, material receipts, and canceled checks.
One thing that we are always cautious of is cash payments. Most insurance companies will not accept cash payments as a form of payment to be used in the recovery of the depreciation. In order to recover the depreciation, homeowners must complete all repairs as outlined in the insurance company’s estimate. They may not use money from this insurance claim to repair undamaged parts of their home and intend to use those costs to recover the depreciation. Some insurance companies will also require photos of the completed work in order to recover the depreciation.
How Can Depreciation Help You?
Depreciation can provide you with the maximum payout for any items lost in your home. It is important to use a public adjuster for this part of the insurance claim process as they will provide a more honest price quote for you and the accurate pricing of your items.
If you need more information on depreciation insurance claims in RI, head over to our Youtube channel to watch Steven Avarista, our Accounts Receivable Associate, talk more about this confusing topic.