How is a value determined for damaged contents? Is it a depreciated value of what was originally paid or the replacement value?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Oct 6, 2012

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Insurance Question from Cypress, CA

Asked on 10/06/2012

How is a value determined for damaged contents? Is it a depreciated value of what was originally paid or the replacement value? My garage flooded and damaged a lot of personal items. What is the manner in which a value is placed on the items when the insurance company makes an offer? Shouldn't the offer reflect the replacement cost of a lost item? For example; a printer cost me $100 and to replace it is now only $50. In ts case $50 is the value. Now if you bought a wash machine on sale for $500 because they were discontinuing that model and it is a total loss, the next model that comes out is $750, then the replacement cost is $750, correct?The insurance company shouldn't depreciate personal items should they?

Answer given on October 24, 2012

When you have a personal property loss, the insurance policy is generally a replacement cost policy. This means you will get new for old and if the value has increased, you will get the larger amount.However, most insurance companies will first issue a check for the actual cash value of the property that is lost or damaged. When you actually replace the property, and provide a receipt for the replaced item, the insurance company will then issue a check for the difference. This is done because the standard homeowner policy requires that you actually repair or replace the item to get replacement cost. Of course, your deductible will also apply to the loss.Once you have replaced the items that were damaged, contact the adjuster and they will advise you to fax or mail the receipts to them to settle the claim. Please be aware that if you upgrade an item, the insurance company will not pay for the upgrade, unless there is no item availasble that is similar to the damaged property.

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