ACTUAL CASH VALUE GUIDE
(May 2020)
Policies that insure residential personal property pay losses on an actual cash value basis, although coverage on a replacement cost basis is widely available as an option.
The property’s age, useful life, amount of use, obsolescence, original cost and replacement cost are factors in determining how much less an item is worth than a new one of its kind. The reasonable life expectancy of personal property is basic to establishing fair valuation. The figures below are offered ONLY as a guide. There are always valid reasons for varying estimations. Often, other sources (such as manufacturers and retailers) are necessary for accurately determining a given piece of property’s actual cash value.
The exact time when an insured will desperately need to have information concerning his or her personal property is the same occasion when it won't be available—after a loss. In order for any information concerning personal property to do any good, the insured must have information about its quantity and quality. Therefore, it is critical for insureds to maintain accurate records about their property such as a written or photographic inventory, supported by complete records such as purchase price and date or better still, store receipts. Once an insured has complete information about his or her property, the next step is to adjust for any change in value.
Formula For Depreciation Percentage
Determining the actual cash value of lost or damaged property depends on the depreciation applied to the replacement cost. Obviously, depreciation is an important element in every claim. The proper approach is determining the correct amount of depreciation in the ratio of the age of the item to its life expectancy. A simple formula to determine the percentage of depreciation is:
Age of Item ¸ Life Expectancy (in years)
= Item's applicable
depreciation percentage.
|
Example: Jane
Consumzit will never use friends to help her move again. A couple of buddies
from work had just put her Foodcave refrigerator down on her porch after
moving it off a rental truck. They told her they needed a rest before moving
it inside her new home. Unfortunately, they did not put the refrigerator
completely on the porch. Jane watched in horror as her beautiful, two-year-old,
22 cubic foot refrigerator shifted and then tipped off the porch. It slammed
violently onto her new home's cement stairs and sidewalk. Jane found out from
the store where she purchased the Foodcave that it has a fifteen-year life
expectancy. It cost her $1,750. |
|
|
|
Age of Item |
¸
Life Expectancy (in years) |
= Item's applicable depreciation percentage |
|
Refrigerator 2 years old |
÷
Life Expectancy 15 years |
= 13.3% Applicable, annual Depreciation |
|
$1,750 |
X 13.3% |
$99.75 (amount of depreciation) |
IMPORTANT: The depreciation considerations discussed or implied in this article have nothing to do with depreciation tables or rules used for business, inventory valuation or tax purposes. They are meant only as an illustration of approaching a residence’s total property exposure.
Property Which May Now Be Obsolete
Many property owners may have possessions of little or no insurable value. The obsolescence may be due to technological advancement, fashion or the property may have exceeded its useful life. Insurance professionals might suggest that their clients examine their property and disposing of what is no longer needed.
Of course, some older property may have value because of antiquity or collector status. In such cases, insureds should find a way to determine and document the property value (not to mention arranging for suitable coverage). Following are examples of some items that may have lost their value:
· Cassette, eight track players and tapes
· Hot plate
· Hi-Fi or Stereo Record players
· Movie Reels
· Wooden Tennis Racquets
· Video Game Systems and game cartridges (i.e., original Sega, Nintendo, Atari, etc.)
· Phono Disc Players and Phono Discs
· Beta Format Video Cassette Recorders
· VHS Tapes (blank and pre-recorded)
· Desk Top Personal Computers
· Reel-to-reel movie projectors
· Reel-to-reel tape recorders
· Old unused cell phones
· Vinyl Record Albums
Naturally, our reference to obsolete classes of property only applies to normal, routine property.
Any attribute that may make the property distinctive may result in preserving or even increasing its value. Property considered as classic, antique or memorabilia falls into this situation and coverage is available by either endorsing or purchasing stand-alone personal property insurance product.
|
|
Example: Bjorn
Smith calls Martina, his insurance agent, and asks her to add special
coverage to his homeowners policy for a wood tennis racquet that he got in
1980. He explains that the racquet was only used once and is in near-mint
condition. |
|
Scenario 1: Martina, after discovering that Bjorn received
it as a birthday present explains to Bjorn that, except for any sentimental
value, it would not make sense to add special coverage. |
Scenario 2: Martina, after discovering that Bjorn received
it as a memento during a Wimbledon Tennis Championship and it was signed by
another guy named "Bjorn," instructs her client to get an appraisal
so she can determine how much coverage to request on a personal property
schedule endorsement. |
Emerging Property Considerations
Just as considerations must be made for residential property that may be obsolete, allowances should also occur for newer types of property. Changes are coming mainly via two paths. The first is the use of familiar property in unfamiliar places, such as entertainment systems (sound, computing and television) in new settings such as the kitchen or luxury bath. Another example is convenience ovens, units that may be set or installed in recreation rooms, living rooms or great rooms. The second path involves the introduction of commercial property in being modified for use in the home, such as drying centers and vending machines. Another element to keep in mind is accounting for greater sophistication and complexity of many types of property, particularly the electronics that are part of security, heating and lighting systems installed in "smart" homes.
Years Of Life Expectancy
As previously mentioned, many factors can substantially influence how an item of property may be depreciated. The ability to estimate depreciation also depends upon whether information on the lost or damaged property is readily available. Beyond the property characteristics already discussed, even style and quality of a piece of property significantly affects its value. Please keep these important considerations in mind while referencing the following estimates on the useful lives of various types of property.
|
Property Life Expectancy |
|
|
Property |
Useful Life in Years |
|
Building and
Structural Components |
|
|
Framing |
100 or more |
|
Roofing: (Shorter life span in cold climates) |
Useful Life in Years |
|
Asphalt 3-tab - organic shingle |
10 - 15 |
|
Asphalt 3-tab - fiberglass shingle |
15 - 25 |
|
Architectural (heavy duty) shingle |
20 - 30 |
|
Aluminum shingle panels |
30 - 40 |
|
Galvanized, utility steel |
20 - 25 |
|
Standing-seam steel, painted |
30 - 50 |
|
Concrete tile |
40—50 |
|
Fiber-cement tile |
30 - 50 |
|
Slate |
50 or more |
|
Cedar shake or shingle |
30 |
|
Fire-retardant cedar shingle |
30 |
|
Southern yellow pine shake |
20 - 30 |
|
Wood composite shingle |
Unknown |
|
Glazed clay tile |
50 or more |
|
Flooring: |
Useful Life in Years |
|
Terrazzo floors |
100 |
|
Oak or pine floors |
100 |
|
Carpets - Under $6.00 per square yard |
5 |
|
Carpets - $6.01 to $9.00 per square yard |
12 |
|
Carpets - $9.01 to $13.00 per square yard |
15 |
|
Carpets - $13.01 to $20.00 per square yard |
20 |
|
Laminated Floors |
20 - 30 |
|
Vinyl Floor Covering |
10 – 20 |
|
Other Structural Property |
Useful Life in Years |
|
Acoustical ceilings |
100 |
|
Awnings - Cloth |
5 |
|
Gutters and downspouts |
30 |
|
Intercoms |
15 |
|
Wood deck |
10 – 15 |
|
|
10 |
|
Board, diving |
15 |
|
Prefabricated and Portable Building |
8 |
|
Rigid Wall Shelters |
20 |
|
Storage Tanks - single wall (above ground) |
10 |
|
Storage Tanks - double wall (below ground) |
20 |
|
Drywall and plaster |
70 |
|
Exterior doors (protected) |
10 to 15 |
|
Masonry fireplaces and mantels |
100 |
|
Oak or pine stairs |
100 |
|
Asphalt driveway |
5 – 7 |
|
Central air conditioning |
8 – 10 |
|
Garage-door opener |
10 |
|
Septic system |
30 |
|
Water Heaters - Electric |
14 |
|
Water Heaters - Gas |
11 |
|
Water Heaters - Tankless |
15 – 20 |
|
Range Hoods |
8 – 18 |
|
Scaffolding Equipment |
5 |
|
Exhaust Fans |
8 – 12 |
|
Furnaces - Gas-Fired Floor & Wall |
15 – 17 |
|
Furnaces - Warm Air (Elec., Gas and Oil) |
16 – 20 |
|
Heat Pumps |
11 |
|
Humidifiers |
9 |
|
Appliances – Major |
Useful Life in Years |
|
Air Conditioner Central |
15 |
|
Air Conditioner Window Units |
10 |
|
Clothes Washer |
13 |
|
Convenience Oven |
12 |
|
Disposals, Food Waste |
10 |
|
Dehumidifier |
12 |
|
Dishwasher |
8 |
|
Dryer - Electric |
10 |
|
Dryer - Gas |
13 |
|
Drying Center |
15 |
|
Floor Polisher |
15 |
|
Freezers - Compact |
12 |
|
Freezers - Standard |
16 |
|
Home Vending Machines |
10 |
|
Garbage Disposal |
10 |
|
Home Control Systems |
7 – 12 |
|
Kitchen Entertainment Centers |
8 – 15 |
|
Ranges - electric |
17 |
|
Ranges - gas, standard |
19 |
|
Ranges - gas, high oven |
14 |
|
Refrigerator - Compact |
14 |
|
Refrigerator - Standard |
17 |
|
Trash Compactor |
10 |
|
Water Pumps |
10 |
|
Appliances - Minor |
Useful Life in Years |
|
Blender |
12 |
|
Can Opener |
12 |
|
Clock |
12 |
|
Coffeemaker |
12 |
|
Coffee grinders |
5 |
|
Crock Pot |
12 |
|
Fans - small |
4-7 |
|
Fans - large |
8-10 |
|
Espresso Machine - under $200 |
4 |
|
Espresso Machine - $200 and above |
4-8 |
|
Heating Pad |
20 |
|
Iron |
12 |
|
Microwave oven |
11 |
|
Sewing Machine |
20 |
|
Space Heaters |
8 |
|
Vacuum Cleaner |
12 |
|
Bathroom/Health Related |
Useful Life in Years |
|
Curling Irons |
4 |
|
Electric Curlers |
5 |
|
Electric Toothbrush |
5 |
|
Hairdryer |
12 |
|
Shaver - cordless |
5 |
|
Shaver - with cord |
7 |
|
Sun Lamp |
20 |
|
Vaporizer |
12 |
|
Beds and Bedding |
Useful Life in Years |
|
Bedspreads - Cotton, synthetics |
12 |
|
Bedspreads - Handmade |
15 |
|
Blankets - Heavy wool and synthetics |
25 |
|
Blankets - Lightweight |
12 |
|
Box Springs |
25 |
|
Mattress |
25 |
|
Cover or pad |
5 |
|
Pillowcases |
5 |
|
Quilts |
25 |
|
Sheets |
5 |
|
Furniture - Baby |
Useful Life in Years |
|
Bassinets |
10 |
|
Carriages (Strollers) |
8 |
|
Cribs - Wood |
10 |
|
Cribs - Plastic |
5 |
|
Furniture |
Useful Life in Years |
|
Bookcase |
20 |
|
Cabinets - Display |
15 |
|
Cabinets - shelving |
20 |
|
Cabinets - storage |
15 |
|
Car Seats |
6-10 |
|
Card Tables |
10 |
|
Chairs - Regular |
15 |
|
Chairs - Upholstered |
10 |
|
Misc. Furniture and Fixtures |
10 |
|
Office Furniture |
10 |
|
Ottomans |
8 |
|
Lamps |
20 |
|
Lampshades |
5 |
|
Sofas & Couches |
10 - 15 |
|
Tables - Chrome or plastic |
12 |
|
Tables - Wood |
15 |
|
Home Entertainment |
Useful Life in Years |
|
Camcorders |
5 |
|
Compact Disc - Players |
11 |
|
Cell Phones |
1.5 |
|
Compact Disc - Systems |
8 |
|
Compact Disc - discs |
7 - 10 |
|
Component Systems - Cassette players |
10 |
|
Component Systems - Receiver |
12 |
|
Component Systems - Speakers |
12 |
|
DVD Player/Burners (high quality) |
4-8 |
|
DVD Player/Burners (low quality) |
2-5 |
|
DVDs - consumer recordings |
6-8 |
|
DVDs - professional recordings |
10-12 |
|
Headsets, Handsets, Microphones |
5 |
|
MP3 Players |
2-3 |
|
Radio |
12 |
|
Satellite Dishes |
20 |
|
Television, Color |
12 |
|
Video Game - Cartridges |
2 – 4 |
|
Video Game - Systems |
5 |
|
Video Game - Accessories |
2 – 4 |
|
Kitchen Items |
Useful Life in Years |
|
Dishes - Plastic |
12 |
|
Dishes - Other |
25 |
|
Electric Grill |
15 |
|
Glassware |
25 |
|
Pots and pans - copper, cast iron |
25 |
|
Pots and pans - stainless steel |
15 – 20 |
|
Pots and pans - aluminum |
5 – 10 |
|
Pots and pans - glass |
5 –10 |
|
Linens - Napkins |
10 |
|
Linens - Tablecloths, Etc. |
25 |
|
Linens - Other |
5 |
|
Roaster |
12 |
|
Toaster |
20 |
|
Utensils - Miscellaneous |
5 |
|
Utensils - Plated |
20 |
|
Utensils - Sterling |
indefinite |
|
Waffle Iron |
20 |
|
Office Equipment/Computers |
Useful Life in Years |
|
Adding machine |
5 |
|
Addressing machine |
5 |
|
Calculator |
5 |
|
Copier |
5 |
|
Cutter, paper |
10 |
|
Desk |
15 |
|
Display monitor |
5 |
|
Drive tape/disc other |
5 |
|
Facsimile (fax) machine |
3 |
|
Modem |
5 |
|
Computers - Desktop |
6 |
|
Computers - Laptop |
4 |
|
Computer - Tablets |
3 |
|
Printer |
5 |
|
Postage Machine |
10 |
|
Telephone - desk |
23 |
|
Telephone - wall (corded/cordless) |
5 - 12 |
|
Telephone - cell |
1 - 3 |
|
Scanner |
5 |
|
Misc. Office Machines |
10 |
|
Lawn and Outdoor Equipment |
Useful Life in Years |
|
Barbecue Sets |
12 |
|
Chain Saws |
5 |
|
Patio Furniture Sets - Aluminum and steel |
5 |
|
Patio Furniture Sets - Fabric |
3 |
|
Patio Furniture Sets - Cushions |
3 |
|
Patio Furniture Sets - Plastic |
5 |
|
Patio Furniture Sets - Redwood |
12 |
|
Patio Furniture Sets - Umbrella |
3 |
|
Patio Furniture Sets - Wrought Iron |
25 |
|
Garden Tools |
8 |
|
Lawn Edgers |
8 |
|
Lawn Mower - Power |
5 |
|
Lawn Mower - Manual |
15 |
|
Lawn Mower - Tractor (riding) |
12 |
|
Roller |
25 |
|
Snow/Leaf Blowers |
7 |
|
Wheelbarrow - Metal |
5 |
|
Wheelbarrow - Vinyl |
5 |
|
Yard Equipment |
5 |
|
Miscellaneous |
Useful Life in Years |
|
Alarm Systems - Local |
5 |
|
Alarm Systems - Monitored |
5 |
|
Billfold |
5 |
|
Books - Fiction or Non-Fiction |
5 |
|
Books - Professional or Reference |
5 |
|
Books - Paperback |
5 |
|
Boxes, Jewel-Cigarette |
20 |
|
Brushes |
25 |
|
Clocks, Grandfather |
30 |
|
Clocks - non-electric, under $25 |
15 |
|
Clocks - non-electric, over $25 |
25 |
|
Clothes Hamper |
5 |
|
Clothing |
5 or less |
|
Flags and Pennants |
5 |
|
Hearing aid |
5 |
|
Jewelry - Costume |
5 |
|
Jewelry - Fine |
Indefinite |
|
Eyeglasses |
12 |
|
Luggage & briefcases |
25 |
|
Miscellaneous small toys |
3 |
|
Ornaments and Decorations |
10 |
|
Pen & Pencil Sets |
12 |
|
Miscellaneous |
Useful Life in Years |
|
Pocket Knives |
20 |
|
Rugs - Braided |
7 |
|
Rugs - Oriental |
25 |
|
Rugs - Throw |
5 - 10 |
|
Toys, electric train |
12 |
|
Smoke detector |
6 |
|
Watches - Under $150 |
12 |
|
Watches - Over $150 |
20 |
|
Watches - Other |
Indefinite |
|
Motorized Property |
Useful Life in Years |
|
Carts |
10 |
|
Mini-Bikes |
5 |
|
Motorcycles, Motor Scooters |
12 |
|
Tractors, Wheeled |
13 |
|
Vehicular Furniture and Accessories |
18 |
|
Snowmobile |
5 |
|
Musical Instruments |
Useful Life in Years |
|
Bass, string/ double |
15 |
|
Bassoon |
15 |
|
Clarinet |
5 |
|
Drum |
5 |
|
Fiddle |
5 |
|
Harp |
15 |
|
Harpsichord |
5 |
|
Keyboards (Electric) |
10 |
|
Other Musical Instruments - under $100 |
5 |
|
Other Musical Instruments - $101 to $500 |
12 |
|
Other Musical Instruments -over $500 |
25 |
|
Piano - under $3,000 |
20 |
|
Piano - over $3,000 |
Indefinite |
|
Sporting Goods and Hobbies |
Useful Life in Years |
|
Bar Set |
10 |
|
Binoculars |
25 |
|
Bicycles |
10 |
|
Bicycle Racks |
10 |
|
Bowling Ball |
15 |
|
Camping Equipment |
12 |
|
Exercise - Barbell Set |
15 |
|
Exercise - Bench |
12 |
|
Exercise - Unit |
15 |
|
Fishing Tackle Rods - under $50 |
12 |
|
Fishing Tackle Rods - over $50 |
20 |
|
Miscellaneous |
Useful Life in Years |
|
Fishing Reels - under $50 |
15 |
|
Fishing Reels - over $50 |
25 |
|
Fishing Lines and Lures |
3 |
|
Golf Bags |
12 |
|
Golf Clubs |
12 |
|
Golf Equipment, Misc. |
10 |
|
Guns Rifles and shotguns - $250 |
25 |
|
Guns Rifles and shotguns - over $250 |
Indefinite |
|
Guns - Ammunition |
8 |
|
Miscellaneous Firearms Equipment |
8 |
|
Pistols - under $100 |
25 |
|
Pistols - over $100 |
Indefinite |
|
Photographic Equipment - under $250 |
12 |
|
Photographic Equipment - over $250 |
25 |
|
Carrying case |
12 |
|
Racquets, metal or composite |
5 |
|
Rope - Chain and Wire |
5 |
|
Rope - Fiber, Cordage and Twine |
7 |
|
Rope - Fittings, Cable and Chain |
13 |
|
Scooter or tricycle |
12 |
|
Tents and Tarpaulins |
5 |
|
Tools |
Useful Life in Years |
|
Hammer |
10 |
|
Handsaw |
25 |
|
Woodworking Machines |
15 |
|
Saws and Filing Machines |
20 |
|
Drilling and Tapping Machines |
15 |
|
Grinding Machines |
15 |
|
Lathes |
20 |
|
Misc. Machine Tools |
15 |
|
Fans and Blowers Equipment |
4 |
|
Fire Fighting Equipment |
14 |
|
Compressors and Vacuum Pumps |
10 |
|
Power and Hand Pumps |
15 |
|
Plumbing Fixtures and Accessories |
15 |
|
Hand tools, Edged-Non-powered |
10 |
|
Hand tools, Non-edged, Non-powered |
21 |
|
Hand tools, Power Driven |
10 |
|
Indoor and Outdoor Electric Lighting |
16 |
|
Drill Bits, Counterbores and Countersinks, Hand and Machine |
10 |
|
Tool and Hardware Boxes |
20 |
|
Sets, Kits and Outfits of Hand Tools |
23 |
|
Measuring Tools |
10 |
|
Tools |
Useful Life in Years |
|
Motors, Electrical |
10 |
|
Electrical Control Equipment |
8 |
|
Watercraft and Equipment |
Useful Life in Years |
|
Boats, Row and Outboard |
12 |
|
Buoys |
11 |
|
Small Craft |
23 |
|
Pontoons and Floating Docks |
30 |
|
Lifesaving and Diving Equipment |
10 |
|
Misc. Vessels |
8 |
|
Marine Hardware and |
20 |
|
Outboard Motors - Fresh water |
15 |
|
Outboard Motors - Salt water |
12 |
|
Trailers |
23 |
|
Window Treatments |
Useful Life in Years |
|
Draperies - Lined |
12 |
|
Draperies - Unlined |
9 |
|
Curtains |
5 |
|
Traverse Rods |
25 |
|
Other Hardware |
25 |
|
Shades |
12 |
|
Venetian Blinds - Metal |
15 |
|
Venetian Blinds - Vinyl |
6 |