Module 3: Recoverable Depreciation Explained
What it means to you
Confused by recoverable depreciation? You’re not alone. Most people aren't used to this concept, and insurance companies don't make it easy. This video breaks it down so you know exactly what to expect.
How insurance calculates recoverable depreciation
It often feels like a mystery: you send a list of your belongings to the adjuster, and weeks later, it comes back with every item's value slashed.
How it works: Insurance companies usually hire a third party to decide how much your items have "aged" or lost value (a.k.a. depreciated). Sometimes they look at each item individually, and other times they just apply a flat discount to everything you own.
Your rights: You don't have to just accept their numbers. You are entitled to see exactly how they calculated the depreciation. Most adjusters use a program called Xactimate, which should show the age and condition they assigned to every single item.
What to look for:
Check the age: If they listed your one-year-old TV as 10 years old, ask for that line item to be updated.
Check the condition: If they labeled a "like-new" sofa as being in "average" condition, be sure to ask for that to be reflected accordingly.
The Bottom Line: Don’t hesitate to ask how they reached that number. If their data is wrong, your payout will be too.