Depreciation calculator: actual cash value vs replacement cost

When an adjuster values your belongings, the first check is usually the replacement price minus depreciation. This calculator reproduces that arithmetic item by item so you can test an adjuster's figures and see how much a replacement cost policy would pay back after you replace things.

How to use it

Add one row per item or group of similar items. For each, enter:

• A name, so you can find it later.
• The cost to replace it new today, from a current store price or listing, not what you paid.
• Its age in years and its useful life in years. The Type menu fills in a typical life for common categories such as electronics, upholstered furniture, mattresses, major appliances and clothing; you can overwrite it.

Then set the minimum value an item keeps and tick the box if your policy pays replacement cost on belongings. Your declarations page and any personal property replacement cost endorsement will tell you which settlement you have. The Add, Remove and Clear buttons manage the list. If you press Save on this device, the list stays in your browser only.

How the math works

For each item, the share of value kept is the larger of the minimum and one minus age divided by useful life. Actual cash value is replacement cost times that share; depreciation is the rest. The table totals all three columns. With the replacement cost box ticked, the headline is the first check at actual cash value, with the depreciation total shown as the amount you may recover after replacing the items and sending receipts. Unticked, the actual cash value is the final answer, before your deductible.

Say, hypothetically, a $1,200 television that is 3 years old with a 6-year life, a $2,500 sofa at 5 of 10 years, and a $2,200 refrigerator at 4 of 12 years, with the default 10% minimum. Their values are $600, $1,250 and about $1,467. Replacement cost totals $5,900, actual cash value $3,317, and depreciation $2,583.

What it assumes

This is straight-line depreciation, the simplest method. The default lives (for example 6 years for a television or computer, 10 for upholstered furniture, 12 for a major appliance, 5 for clothing) and the 10% minimum are editable examples, not an insurer's schedule. The framework matches how the standard ISO homeowners form (HO 00 03 05 11, May 2011 edition) settles belongings: at actual cash value unless a replacement cost endorsement is added. The NAIC model claims regulation (Model #902), which states adopt in varying form, defines actual cash value on residential fire claims as replacement cost less depreciation and lets the insured ask for the worksheets showing the depreciation.

Where it stops being right

Insurers and claims software use their own depreciation tables, and condition, brand and obsolescence all move the figure, so treat this as a check on an adjuster's numbers rather than a prediction. States differ on what an insurer may depreciate, and your state insurance department can tell you which rules apply. Replacement cost policies set a deadline to replace and claim the held-back amount; the standard form's building provision, for example, gives 180 days to tell the insurer you intend to repair or replace. Read your own conditions, and keep receipts for the replacements.

The tool also stops at the item level. It does not apply sublimits or the deductible, it does not model a holdback on a dwelling loss, and it cannot tell you whether a given item is covered. For the underlying idea, see replacement cost vs actual cash value: why it matters and recoverable depreciation: getting the rest of your claim. A complete room-by-room list makes every figure here easier to defend; start with the how to make a home inventory for insurance.