Depreciation

In fine art and valuables insurance, depreciation refers to the loss of value that remains after a damaged item has been restored. A restored work, even by the best specialists, never quite recovers its prior value, because the market pays a premium for integrity and penalises any impairment, however well repaired. Policies in the class therefore explicitly cover this residual loss: in the event of partial damage, the insurer bears the restoration cost plus the depreciation remaining after it, within the limit of the insured value, with some wordings capping this item, for example at 10 % of the sum insured. This indemnification of the loss in value following repaired damage is one of the technical signatures of fine art insurance, and embodies the limit of insurance in the face of the irreplaceable: the contract can pay for restoration and then pay again for the value lost despite it, but it cannot give the object back its original integrity. Assessing depreciation, necessarily a matter of expertise, is a classic source of discussion between insurer, policyholder and restorers.

A canvas torn in transit is restored for 40,000 euros. The appraisal concludes it is now worth 8 % less than before the accident: the insurer pays for the restoration and additionally settles this depreciation, within the contractual cap.

perte de valeur résiduelle, loss in value, diminution de valeur