15/07/2022
A1 Davao Tip #6
What is the Depreciation Fee in Car Insurance? A depreciation fee is a percentage you pay (depending on your car’s age or depreciated value) for the cost of new parts to replace damaged ones. This means, you’re paying the difference in the value of an auto part at the time you bought the car and its value at the time it’s replaced. This type of participation fee applies only to vehicles older than three years.
There’s no depreciation fee for total vehicle loss. Here’s the depreciation schedule that car insurance companies use to compute a policyholder’s share of the replacement part cost:
In the event of a claim being payable under Section III of this policy for the cost of replacement parts, the amount o settlement shall be the cost of the brand new part(s) to replace the damaged part(s) of the insure vehicle less the share of the insured on the cost of the replacement parts computed based on the following depreciation schedule:
Age of the Vehicle - Rate of Depreciation
Up to 3 years Nil
Over 3yrs up to 4 yrs 20%
Over 4yrs up to 5 yrs 25%
Over 5yrs up to 5 yrs 30%
Over 6yrs up to 7 yrs 35%
Over 7 years 40%
Batterries, Tires, Ball Joints, Tie Rods
and shock absorbers (for vehicles over three years old 45%
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