Depreciation Schedule
A depreciation schedule is the table or formula an insurance carrier uses to calculate how much value each component of a property has lost due to age and wear, directly reducing the actual cash value payment on a claim.
How Carriers Calculate Depreciation
A depreciation schedule is the framework an insurance carrier uses to determine how much value each property component has lost over time, and it directly controls the actual cash value payment the homeowner receives. Every component on a property, from the roof shingles to the gutters to the interior drywall, has an expected useful life. The depreciation schedule divides the component's age by that useful life to calculate the percentage of value lost.
A 10-year-old architectural shingle roof with a 30-year useful life, for example, would be depreciated approximately 33%. That percentage is applied to the replacement cost to produce the actual cash value.
Line Item vs. Blanket Depreciation
Proper depreciation is calculated at the line item level. Each component has its own age, condition, and useful life. A new gutter system on a 15-year-old roof should not carry the same depreciation rate as the shingles. However, some adjusters apply a single blanket depreciation rate across the entire estimate. This is one of the most common and most supplementable errors in insurance claims. If the estimate shows every component depreciated at the same percentage, audit the schedule and challenge it.
Using the Schedule to Your Advantage
Request the depreciation methodology used on your claim. Compare the applied rates to industry-standard useful life expectations. Document the actual condition of each component with photographs. If the carrier depreciated a 5-year-old ridge vent at 40% when its useful life is 25 years, the math does not support the applied rate. Building your supplement around specific depreciation errors with supporting documentation is one of the most effective ways to increase an ACV payment.
Frequently asked questions
Depreciation schedules are internal carrier documents. Some carriers publish general guidelines, but specific rates are often applied at the adjuster's discretion based on component age and condition. You can request the depreciation methodology used on a specific claim.
Yes. If the carrier applied excessive depreciation or used a blanket rate instead of depreciating each component individually, you can challenge it through the supplement process with documentation of each component's actual age and condition.
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