The case of the 3-year-old headlight is the perpetual dispute of the casco world: the replacement part is new, but the insurer may deduct the age-related difference in value. This is depreciation – not a trick, but the principle that a claim shouldn't leave you better off than before. The question isn't whether it exists, but how and to what your own policy applies it.
- The principle of depreciation: a settled claim is not a windfall – the insurer may deduct the added value of a brand-new part.
- The practice depends on the policy: which parts, from what age, at what rate – this is one of the most important lines in any comparison.
- Many policies include a depreciation-free or discounted category – for example up to a certain age or for specific parts; clarify this when you take out the policy.
Why does depreciation exist?
Property insurance compensates the loss – not more. If a worn bumper on an eight-year-old car is replaced with a brand-new one, the car has become more valuable at that point than it was before the claim: the deduction reflects that surplus. The principle is fair – the practical question lies in the proportions: which parts it applies to, from what age, and at what rate, and what the policy says about paintwork, tyres, the battery, and wear-and-tear components.
How does the insurer typically calculate it?
The claim calculation is built from repair line items: parts, paintwork, labour. Depreciation typically affects the parts items – with rates depending on age and category, set out in the policy or in claims-handling practice. Labour is typically not affected by depreciation. For a total loss, the depreciation question appears differently: there, the market value at the time of loss of the whole car is the reference point. We deliberately don't quote figures here: the rates vary by policy – which is exactly why it's a point of comparison.
What can the owner do?
When taking out the policy: ask about the depreciation-free category – many policies offer a more favourable rule up to a certain age or for specific parts; this is one of the most valuable lines in the comparison table. During the year: track your car's real value and keep it well maintained – a well-documented, serviced car is also in a stronger position at claim time. At claim time: ask for an itemised calculation and check which lines carry a deduction. And where depreciation is disputed, help from the broker comes in: depreciation disputes and value disputes.
Want to know how your own policy applies depreciation? Let's look at the small print together. book a free 20-minute consultation →
