Calculating Actual Cash Value, Part 17: Ohio

The test for calculation of actual cash value in Ohio is Replacement Cost Minus Depreciation.

In Paterson-Leitch Co. v. Insurance Company of North America,1 the issue was whether the loss arising from fire damage to three buildings should be measured by replacement cost minus depreciation, or whether a demolition contract entered into by the policyholder should alter the analysis. The court held that the demolition contract would not be admissible on the issue of “actual cash value,” and it stated the valuation test as follows:

[I]n the case of partial loss the test ordinarily utilized in Ohio for determining damages to dwellings is the cash amount that would be required to put the property in the same condition in which it was at the time of the loss, i.e., in general, replacement cost minus depreciation, and not market value.

The Ohio Department of Insurance has considered whether labor should be depreciated and stated the following:2

In order to be consistent with the industry practice of not depreciating labor, the examiners considered the depreciation of labor to be an exception.


1 Paterson-Leitch Co. v. Insurance Co. of North America, 366 F.Supp. 749 (D.C. Ohio 1973).
2 See p. 7, Ohio Department of Insurance Market Conduct Examination of Sandy & Beaver Valley Farmers Mutual Insurance Company (June 30, 2011):


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Ashleigh - March 14, 2016 11:15 AM

"Actual Cash Value" of an automobile. Recently, I was run off the road by a SEMI...the damage sustained to my vehicle was approximately $ do I know what the actual cash value of my vehicle is (obviously, the insurance company says I MUST use their appraiser; however, without a doubt .. the 'contracted' appraiser has an incentive to lowball the figure in order to continue getting jobs from the insurance company.

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