insurance claim on personal property: Repair vs Replace vs “market value”

Question

I’d like to understand better when it comes to replacing personal property that was damaged, what an insurance company owes their customer? For example, I understand that if a 5 year old couch is damaged, they would likely give you the depreciated value of the couch upfront and if you replace the couch, the difference in the price to replace it.

Now, let’s take a collectible. Let’s say the collectible cost 20 years ago $50. But let’s pretend its worth $500 as its no longer available. Should we expect the insurance company to cover back up to the original cost, or the value lost?

In: 2

Answer 1

Depreciation and appreciation are literally the opposite sides of the same coin. You can’t regogniz) recognize one phenomenon without including the other.