Accrued depreciation

Accrued Depreciation is the cumulative reduction in the value of an asset over time due to wear and tear, age, or obsolescence. This concept is critical in property and casualty insurance policies, where accurately calculating depreciation impacts claim settlements, aligning with current efforts for fair and precise compensation. A 10-year-old roof will have accrued depreciation, meaning a claim for roof damage will not cover the cost of a brand-new roof but rather its depreciated value.