Last week, I introduced this series to explain more about how an insurance company determines the actual cash value of a claim and how the courts are looking at ACV issues. Focusing on personal property again this week, I got some enlightening perspective on how an insurance company will put a price tag on your personal belongings under an ACV policy. I received great comments from two very distinguished experts on personal property valuation. Don Phillips has 39 years of property claims experience and Dick Krajnik is a personal property inventory specialist.

Calculating of ACV

First, Mr. Phillips explained how he was trained by insurance companies to handle ACV:

I was trained that the process used to determine ACV was a two fold process. First you needed to determine the current replacement cost value (RCV). When I was trained, that didn’t mean relying on a receipt showing what was paid originally. It meant determining today’s RCV. What someone paid for a solid wood china closet five years ago may not reflect today’s cost, which has probably gone up. However it was also possible that the RCV decreased. Flat screen TVs and computers are perfect examples of items where the RCV for comparable models with the same or better technology has decreased over time. When calculating the RCV of an item, I use the internet to get the current RCV. If I have the make and model number I will research and quote the exact RCV. If I don’t have the make and model information I still use online research and find a comparable item of the same quality as the damaged item and I quote the comparable item’s RCV.

Old School vs. New School Ways to Calculate Depreciation: Depreciation Guides are a Tool not a Bible!

Don Phillips breaks it down:

Once RCV has been determined you move on to calculating the depreciation to arrive at the ACV. Back when I was on the carrier’s side the proliferation of software like Xactimate for contents wasn’t as prevalent as it is now. However we had printed depreciation schedules that listed a wide variety of personal property items with a suggested average depreciation factor. The software now being used is just an upgraded digital version of those same old depreciation schedules. While they were helpful tools it was stressed to me and I in turn stressed to my adjusters that the depreciation guides were a tool and not a bible. While I am aware that claims examiners and adjusters have large file inventories and need to move files I still believe that each claim must be evaluated on its own facts.

Mr. Krajnik further explained:

In calculating the ACV many factors cone into play. Age, pre-loss condition, availability, rarity of the item, name brands, type of item, and so on. There are many more categories and circumstances that may be factors in determining ACV. Overall depreciation to determine ACV depends on many factors including the pre-loss condition. Whether an item been well maintained or had pre existing chips, cracks, or signs of wear, makes a difference.

Remember, the Inventory Companies Client is NOT you, it is the Insurance Company!

When a carrier calls out a specialist on a claim, that person may work directly with you as the owner to generate a list, but Mr. Krajnik cautions homeowners to remember this company is being hired by the insurance company and their loyalty runs to the company and not to you. Insurance companies hire the “experts” that “save” them money.

Some insurance companies subscribe to outside inventory companies who work strictly for them. In my experience, these companies generally provide very low replacement cost prices and then take a high approach to depreciation. This practice obviously leads to a totally unacceptable ACV.

It is important for policyholders to recognize that the deprecation amount listed on your personal property values by the insurance company are subjective and many assumptions are made. The carrier may assume that something is aged or worn out because of the description used or length of time you have owned an item. Don’t let assumptions decrease the amount you are paid for your loss. An easy rebuttal can be made by showing the pre-loss condition, but you need the proof. This is just another important reason to video and photo inventory and catalogue your home every year. Save the files to a site like or

No, Depreciation Does Not Always Apply

Both experts agree that depreciation does not always apply. In fact, many items increase in value. A record collection is one example.

No depreciation should be applied to sports memorabilia, antiques, jewelry, gold, silver, fine china, crystal, artwork and certain other collectibles.

Once again it is incumbent on the adjuster or expert to do the research to find out today’s value and not just rely on old receipts or appraisals.

If you have questions about the how an insurance company has determined the actual cash value of your claim, contact Merlin Law Group for a no cost consultation.

A big thank you to Don and Dick for their contribution to this piece.

Contact Don Phillips at 954-942-0201;

Dick can be reached at Krajnick 704-293-4470;