The "Contents Depreciation" Trap and How to Escape It
When you have a property loss at your home or business that involves damage to your personal property, you will likely submit a claim to your insurance company. When the insurance adjuster receives your claim for your contents, he will look to the policy terms to know how to adjust the claim.
Most of the property insurance policies worldwide have a clause that applies depreciation to your contents claim. In short, depreciation is the process whereby the adjuster takes the replacement cost of an item and deducts an amount that reflects the age and condition of your property at the time of the loss.
For example, you have a washing machine damaged by fire. Replacement cost of the washer is $400.00. The useful life of a washer is 10 years, and your washer was two years old and in average condition. So, the adjuster would deduct 20%, which is 10% per year times two years. Your actual cash value would be $320.00.
But the trap lies within the adjusting process. Customarily, the policyholder just accepts the depreciation applied by the adjuster. But adjusters regularly make mistakes on depreciation. Usually, they apply too high a depreciation amount. That means that the policyholder gets less money in their claim settlement. Without a way to challenge the adjuster’s calculations, your trapped. Less money means you cannot replace your contents correctly, and you’re trapped without enough money.
Here’s the Escape Strategy
1. When you prepare your Contents Inventory Sheet, make sure that you have correctly listed all the personal property items, including the correct age and condition of each item.
2. Go to the website listed below, and click on the “Forms” button. There, you will find a Depreciation Schedule that you can download. That schedule will show you industry standards for depreciation for hundreds of different items.
3. Challenge the depreciation of EVERY ITEM on your Contents Inventory Sheets. Make sure that the adjuster has applied the correct depreciation amount.
Challenging depreciation is one way that you can add hundreds or even thousands of dollars to your claim settlement.
If you have experienced a property loss, whether fire, wind, flood or other, you need to know winning insurance claim strategies. The insurance company will not tell you the claims process, but I will. I will show you how to take control of your insurance claim, and add hundreds or even thousands more dollars to your claim settlement. For more information, go to the website listed below.