Depreciation

Depreciation refers to the decrease in an item’s value over time due to wear, tear, and obsolescence. Claims adjusting, depreciation is the ‘gap’ between what you paid for an item and its current market value. Understanding this concept is essential if your policy uses Actual Cash Value instead of Replacement Cost. For example, a ten-year-old television will have significant depreciation, meaning your payout might only be a fraction of the cost to buy a new, equivalent model.