When Depreciation Applies to Your Claim

depreciation is the reduction in value applied to damaged items when calculating an acv settlement. Depreciation does NOT apply when you have rcv coverage. Understanding when your policy applies depreciation is essential to calculating your expected settlement.

• You selected acv coverage: This is the more common choice for lower-cost policies. acv means you receive the replacement cost minus depreciation.
• You did not purchase rcv endorsement: Some policies offer rcv for an additional premium. If you didn't purchase it, depreciation applies.
• The damaged item is subject to depreciation under your policy: The policy must explicitly state which items or categories depreciate.

• You have rcv coverage: rcv pays replacement cost without depreciation. This is the full cost to replace the item new.
• The claim does not trigger acv evaluation: Some policies use rcv for certain perils (e.g., fire) but acv for others (e.g., water damage). Check your policy.
• The item is explicitly excluded from depreciation: Some policies exclude certain items from depreciation (e.g., new construction, recent replacements).

Under typical acv coverage, depreciation applies to:

• Roofing materials and structure
• HVAC systems
• Water heaters
• Flooring (carpet, hardwood)
• Plumbing fixtures
• Interior finishes (paint, drywall, cabinets)

• Review your declarations page or policy to confirm if you have acv or rcv coverage.
• Search your policy for "depreciation" section to identify which items depreciate.
• Check if you have any endorsements that modify depreciation or provide rcv coverage.
• Compare your policy type to your claim settlement to verify depreciation was applied correctly.