Understanding depreciation and cost of damage

Understanding depreciation and cost of damage

When Texas residents incur property damage, they may naturally assume that their insurance company will cover the damage. What people may not realize, though, is that they are responsible for determining the cost of the damage their property has incurred. It is important for people to understand the idea of depreciation and how it affects their property.

In order to estimate the cost of property damage, people typically need to establish what has sustained damage. According to State Farm, people should inspect both the outside and inside of their house and put together a list of the items which are damaged. When homeowners create this list, it is recommended that they include information such as how much an item cost, how old it is and where they bought it, as well as list model numbers and brand names.

In order to be reimbursed for replacing damaged property, homeowners need to understand both the value of their property as well as how this value has changed. United Policyholders says that wear and age can cause your property to decrease in value, and this decrease is called depreciation. Although people might like the idea of set rates of value and depreciation, the process usually does not work like this. Instead, homeowners and their insurance companies can sometimes have different ideas about how much something has depreciated. This can be important because an insurance company may consider some depreciation to be excessive, and this affects the amount people receive after replacing their property.

Because homeowners play a large role in determining cost of damage, it is important for them to understand that an item’s age does not always affect the value. Instead, people should consider how much use an object has experienced. If homeowners feel that their insurance company is disregarding their estimations of value, they may want to speak to an outside party.

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