This may have been discussed before, but I have searched the archives and come up empty handed. Does anyone know of a good resource for depreciation schedules or life expectancy tables on contents? I have tried the IRS website without success.
Each carrier has their own concept of what the useful life of any item is worth. This is based on an "average" life expectancy of the "average " cost of an item.
Some go so far as to publish a chart which is a guidleine for the adjuster.
Several things must be considered in the application of depreciation:
1) The age and CONDITION of the item: As a Sofa used 3 months of the year by an elderly couple, cannot sustain the wear and tear of one used 12 months a year by a family with pets and children.
2) The QUALITY of the product: Is a TV set made to be sold for $300.00 the same quality as one made to be sold for $6,000.00?
This is the genre' of the adjuster. Always base the depreciation on both the age and condition of the item, when you are "allowed" to do this. Some directives will not alow this latitude and these obligate you to apply the "baseline" depreciation. You can always mention this in your narrative.