What Is Depreciation On Home Insurance? 
Always ask about Replacement Cost . If your policy pays Replacement cost , it will replace an item without a deduction for depreciation -LRB- the cost to buy a similar item brand new -RRB- . If you do not have Replacement cost , then the insurance company will pay you the fair market value at the time of a loss -LRB- Replacement cost - deprection -RRB- . Depreciation is a deduction in value for every year that the item is used , which lowers it 's value . 