Depreciating insurance works by calculating the amount of the value of the items that were damaged. After that calculation is done, then the insurance company adds the depreciation. The depreciation is added up by the number of years that the item has been owned and the percent of value that the item has lost over time. Insurances do this to account for the time and use of items. Quite often if the item is damaged inside the home or in any other facility, it was used before it was damaged. Since that is the case, the depreciation has to be taken into account.
Insurance should not be responsible for the full payment of any item that is not new, because there had already been use of the item. It is only fair that the depreciation cost comes into play. If an item that is damaged is completely new, then the depreciation will be very minimal. If an item that was damaged is antique, then the depreciation would be different as well.
The dwelling of the home and everything inside the home including furniture, electronics and other things will lose their value over time because of wear and tear and also because of age. Since it is only fair to pay for the actual price of an item, insurance companies take depreciation into account when they offer a payment. Apart from the depreciation, an individual that is making a claim for insurance also has to take in mind that they probably have a deductible. When a claim is paid out, the insurance company takes into account the depreciation of the items, and they also take into account the deductible. Different insurances calculate depreciation in separate ways, so it is a good idea to find out how an insurance company calculates their depreciation before choosing which insurance to use.