Depreciation for wear and tear

Depreciation for wear and tear is the loss of value property has undergone between purchase and loss, through age, wear and obsolescence. Deducting it follows directly from the indemnity principle: replacing as new an item that was no longer new would enrich the policyholder, and enrichment through a loss is precisely what insurance law has forbidden from the outset. Its calculation rests on scales specific to each insurer, unregulated in France, typically applying a percentage for each year of age, subject to a cap. That absence of a common standard makes it the most constant friction point in household claims: two insurers can apply to the same fifteen year old roof deductions differing twofold, with no text able to say which is wrong. The depreciation deducted is not necessarily lost to the policyholder, since replacement cost cover may restore it subject to actual rebuilding. The problem solved is the moral hazard of a contract that would make a loss profitable.

Depreciation scales are subject to no standard in France: each insurer applies its own, commonly on the order of 1 to 2% per year of age and capped between 25 and 30%. It is one of the leading grounds of referral in property claims recorded by the French insurance ombudsman service, set up in its present form in 2015, whose annual reports return to it every year.

dépréciation d'usage, abattement de vétusté