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How is the Waiver of Depreciation Calculated in a Car Insurance Policy?


The first car a person owns is probably one of the most exciting events of their life thus far. The world seems to just open up and everything seems possible, as long as the car is running. One of the most important things about owning a car is purchasing car insurance, which is a subject matter that can be quite a headache to understand, especially if you consider all of the terminology and little rules associated to the insurance industry. Something to know specifically is the waiver of depreciation, which is calculated into a prospective car insurance policy.

What is it?
The waiver of depreciation basically states that the insurer will not depreciate the car if something happens, whether it gets totaled or it gets stolen. Normally, this waiver only stands for 2 years (24 months), but after that, the value of the car is on a depreciated basis. There are a total of eight different methods conducted for calculating depreciation, such as the straight line method or accelerated depreciation method. These are the two processes used in the calculation of depreciation. This waiver of depreciation can really aid people, and acts as a savior for those who happen to have something bad happen to their vehicle within this short period of time. This allows them to be reimbursed for the original price of their vehicle.

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