Appliance Depreciation Calculator

Appliance depreciation is the reduction in the monetary value of a home appliance over time due to age, wear and tear, and obsolescence. Every appliance loses value from the moment it is purchased, and insurers use depreciation to determine the actual cash value (ACV) of an item at the time of a claim.

The standard formula is: ACV = RCV − (Depreciation Rate / 100 × RCV × Age). Here, RCV is the replacement cost value (what it costs to buy a new equivalent today), the depreciation rate is a percentage assigned to the appliance type, and Age is how many years old the appliance is. Multiply these together and subtract from the RCV to get the current actual cash value.

Replacement Cost Value (RCV) is the amount it would cost to buy a brand-new equivalent appliance at today's prices, with no deduction for age. Actual Cash Value (ACV) is the RCV minus accumulated depreciation — essentially what a used appliance of that age and condition is worth today. Insurance policies that pay ACV will pay less than RCV policies because depreciation is deducted.

The depreciation rate is the percentage of an appliance's value that it loses each year. It varies by appliance type based on expected useful life. For example, a garbage disposal might depreciate at 10% per year (10-year lifespan), while a refrigerator depreciates at about 5% per year (20-year lifespan). Insurers and depreciation guides publish standard rates for common home appliances.

No. For insurance and practical purposes, the actual cash value of an appliance cannot fall below zero. Most insurers also set a floor — typically around 10–25% of RCV — as the minimum value regardless of age, because even very old appliances retain some salvage or functional value.

The main factors are the appliance's age, its original replacement cost, the annual depreciation rate assigned to that appliance category, and its physical condition. Additional factors include brand reputation, maintenance history, local market conditions, and whether the appliance has had repairs or upgrades that extend its useful life.

Depreciation rates reflect expected useful life. Appliances with shorter lifespans (like garbage disposals or dehumidifiers) depreciate faster than long-lived appliances (like refrigerators or central air systems). The rates are standardized by insurance industry guides such as Xactimate and are based on actuarial data from millions of claims.

You would need this calculation when filing a home insurance claim to understand the ACV payout, when selling used appliances and pricing them fairly, when doing a home inventory for insurance coverage purposes, or when deciding whether to repair or replace an older appliance based on its remaining value.