Which of the following describes the effect of higher depreciation on property values over time?

Higher depreciation on property values indicates that the worth of a property is declining over time, primarily due to wear and tear, age, or obsolescence. Depreciation reflects the decrease in value from the original purchase price as the property ages and becomes less desirable or functional.

In a practical context, this means that as the property continues to age, unless it is maintained or renovated, its market value is likely to decrease consistently. This trend is particularly evident in real estate markets where older properties may lose appeal compared to newer developments, leading to a tangible decrease in overall value.

Understanding this principle is critical for insurance adjusters, as it helps assess the accurate value of claims and ensures fair compensation reflecting the present condition of the property.