Most homeowner policies cover contents for their full replacement cost, however if you elect not to replace an item, it will be settled for its Actual Cash Value (ACV). ACV means replacement cost less depreciation. Would you like to know how much an item will be depreciated if you elect cash instead of replacement?
The items below were listed in The Columbus Dispatch regarding life expectancy of household items. The list might help you estimate what the depreciation might be. For example, if you have a 5 year old dishwasher with a life expectancy of 10 years and it is destroyed by fire, the insurance company will pay to replace the dishwasher at current replacement cost. However, if you elect not to replace the dishwasher and want cash instead, the company will pay its Actual Cash Value (ACV). Let’s say it would cost $500 to replace the dishwasher.
In this example, the $500 cost to replace the dishwasher would be depreciated by 50%. (It is 5 years old and therefore has used half of its expected 10 year life.) The company would offer $250 as a cash settlement.
Item Life Expectancy:
Coatings on wood floors
Coatings on Interior Doors and Trim
Carbon Monoxide Detector 5-10 years
Faucets 10-15 years
Fire extinguisher 12 years
The estimated longevity of items in this list is based on the assumption of proper maintenance. Figures were gathered from a variety of associations, retailers, manufactures and repair services.
List reprinted from The Columbus Dispatch article Life Expectancy on 4/30/2000.