The other point of view is that the item, for example a rocking chair, should be compared with a modern rocker of like design to determine replacement cost, less an appropriate amount taken for depreciation. The resulting figure would be the ACV.

When we add replacement cost to a policy, one of the exclusions from replacement cost is antiques. Yet, if the company paid market value for antiques under ACV, the same valuation would apply as under replacement cost. This does not seem right. How should these losses be valued?

Michigan Subscriber

A

In the case of unscheduled antiques, market value is the appropriate measure of value. Antiques usually cannot be replaced or, otherwise, replacement may be accomplished only with great difficulty. (However, dealers and expert appraisers in the field should be consulted on items of substantial value as they may have access to sources of supply, and information about rarity, that are not known to casual observers.) And, a characteristic that is unusual for property in general, the value of antiques ordinarily appreciates with age. Depreciation applies to an antique only in terms of condition, the nearer to “showroom condition,” the higher the market price (usually).

Is it “right” or “fair” that ACV at market price and replacement cost are often the same when it comes to antiques (or other collectibles)? However that question is answered, the essential fact is that is the way it is. Any insurance company that wants to treat these articles otherwise must simply amend its coverage promise and, for example, promise to cover antiques not at actual cash value but at replacement cost based on physical replacement of new chair for antique chair. Naturally, no one who owns and values antiques would be persuaded to buy coverage from that insurer, but then it is quite obvious that that insurer does not wish to cater to buyers of antiques.