How Much Does Flood Insurance Depreciate Personal Property?

When your possessions are insured under a standard National Fire Insurance Program policy, they will be reimbursed according to an actual cash value (ACV) system. This refers to the cost to replace them less physical depreciation and any recoverable depreciation clause specified in your policy.

Managed your claim involves understanding its process and challenging excessive depreciation. Below are some helpful tips to assist in your understanding and disputation of depreciation claims when necessary.

Depreciation Schedules

The National Flood Insurance Program (NFIP) typically insures homes at replacement cost while personal property is covered for actual cash value. Private insurers may offer both replacement cost coverage for your dwellings as well as actual cash value coverage of personal belongings. Your items’ actual cash values reflect what they would be worth to a buyer who took into account physical wear and tear as well as normal usage depreciation – for instance, furniture that’s often used will depreciate quicker than items rarely touched.

In the event of a flood, a claim adjuster will assess your possessions based on their age and condition at the time of loss. This evaluation can be subjective and highly negotiable, with adjusters using their own assessments as well as depreciation guidelines provided by their employer to arrive at their assessment of depreciation schedules that seem too harsh in your particular circumstance. It is essential that you keep good records of your belongings such as an inventory list, receipts and photographs to help argue against excessive depreciation schedules which seem harsh in your situation. Keeping meticulous records can help support an argument against overly harsh depreciation schedules which seem unreasonable when considering all available evidence available against it.

Most insurance policies depreciate personal property to reflect its normal wear and tear; however, you may be able to negotiate lower depreciations on certain items by keeping an accurate inventory with receipts and photographs for every major item in your possessions. It should be updated at least annually or whenever you make any major purchases that will increase its depreciation value.

If your insurer refuses to reduce depreciation on specific items, an independent appraiser can conduct an appraisal or valuation for you at an extra cost. Although this can be costly.

Maintaining accurate records can also save money when purchasing a home, particularly if a mortgage lender requires an appraisal or valuation of your property. By doing this, it may help qualify you for lower interest rates or an additional loan to cover the purchase cost of your new residence.


Personal property typically falls outside the scope of a standard home insurance policy and will therefore need to be purchased as an additional flood policy with sub-limits applied, which may limit things like appliances, electronics and wall-to-wall carpeting.

NFIP adjusts personal property on an actual cash value basis, meaning your insurer will only reimburse you for what the item was worth when damaged. Therefore, receipts should be kept for high-ticket items like furniture and appliances in order to obtain maximum reimbursement from them.

An inventory is also an effective way of ensuring an adjuster accurately values your possessions and can help you evaluate if their valuation of them is too low.


Insurance companies depreciate furniture and other household items based on an actual cash value basis, just like appliances and carpeting. But you can help minimize depreciation by maintaining an inventory. Take the time to walk through each room in your house and list everything inside it; many companies provide forms or even offer free mobile apps specifically for this task.

If you own an extensive amount of valuables, purchasing additional flood insurance from a private insurer might be wise. Supplemental flood coverage beyond the $250,000 maximum offered by the National Flood Insurance Program provides extra protection as well as covering expenses caused by any flood damage to your home.

Selecting an appropriate amount for your flood insurance deductible is key to selecting an effective policy. A higher deductible means lower premiums; however, you must be willing to cover that expense out-of-pocket in case of a claim. FEMA offers a tool on their website which helps estimate replacement costs according to age, size and type.

Recoverable depreciation is a feature of some homeowner’s policies that enables homeowners to recover some of the depreciation on items purchased over time, especially larger purchases like furniture and appliances which tend to depreciate quickly – for instance a couch that cost $2,000 could lose 50% of its value within five years; in such an instance if destroyed by floodwaters you would only receive $1000 as compensation from insurer.

Actual cash value adjustments are determined on an individual item basis, taking into account its type and condition as well as remaining life expectancy. Adjusters are trained to evaluate each piece thoroughly in order to make an equitable and reasonable determination.

NFIP commercial flood insurance covers your business building and its contents – this includes inventory, raw materials, work-in-progress products, finished goods as well as food freezers (provided they keep receipts for purchases made) from theft.


Flood insurance from the National Flood Insurance Program (NFIP) offers coverage for both your building and personal belongings, with some items covered under building property coverage while personal property coverage typically protects other items in your policy.

Building property losses are settled using two estimates of value: Replacement Cost Value (RCV) or Actual Cash Value (ACV). An ACV estimate is equal to RCV less depreciation from physical wear and tear; some items like carpeting will always be adjusted on an ACV basis.

Tip: Depreciation amounts are subjective and negotiable, as insurance adjusters use their personal opinions on item values in addition to following any established standards and guidelines from their employer. If an adjuster’s depreciation estimate seems excessive or unreasonable you can challenge it.

As part of your claim process, keeping all receipts for purchases such as carpeting, major appliances and furniture can save a great deal of money in the event of loss. Furthermore, taking photos of all rooms within your house as well as keeping any valuables locked away in a safe is also advised so they are properly documented and reimbursed at fair values if something should happen to them.