Depreciation
/dih-pree-shee-AY-shun/
The decrease in value of property over time.
Definition
Depreciation is the decrease in an item's value over time due to age, wear, and obsolescence. When insurance pays actual cash value, they subtract depreciation from the replacement cost. A 5-year-old laptop worth $1,200 new might have an ACV of only $400 due to depreciation.
Example
The 10-year-old roof was worth $15,000 new but was valued at only $5,000 after depreciation.
More General Terms Terms
The amount you pay for your insurance policy.
The amount you pay out-of-pocket before insurance kicks in.
The contract between you and your insurance company.
A request for payment under your insurance policy.
The protection provided by your insurance policy.
The maximum amount an insurer will pay for a covered loss.
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