Tag Archives: Actual Cash Value

California Supreme Court Affirms California Fair Plan Ass’n v. Garnes, and Preserves Homeowners’ Interests

The California Department of Insurance recently issued a press release announcing that the California Supreme Court affirmed the homeowner reimbursement protections recently decided in California Fair Plan Association v. Garnes.1 Back in June, my colleague Kevin Pollack wrote about the recent decision and whether actual cash value means fair market value or replacement cost minus … Continue Reading

Colorado Joins a Growing List of Jurisdictions Allowing Depreciation of Labor Costs When Determining Actual Cash Value

While I often argue that depreciating labor simply does not make sense, insurers continue to push the question of whether the depreciation of labor costs in Actual Cash Value policies is acceptable. Though several jurisdictions have rejected the depreciation of labor, surprisingly, the recent trend of jurisdictions touching upon the subject has been to allow … Continue Reading

Calculating Actual Cash Value, Part 26: Montana

In Montana, a jury may consider all relevant evidence when determining the actual cash value of the property damaged or destroyed.1 Under the broad evidence rule, the trier of fact “may consider any evidence logically tending to the formation of a correct estimate of the value of the insured property at the time of the … Continue Reading

Does Actual Cash Value Mean Fair Market Value or Replacement Cost minus Depreciation?

What is an insured, who has an “actual cash value” property insurance policy, entitled to recover when their property is damaged, but not a total loss? Is the insured entitled to the cost to repair/replace the property minus depreciation? Or is the insured’s recovery limited to the property’s fair market value? What if the property’s … Continue Reading

Calculating Depreciation: Are Generic Tables Reliable or Based on Any Scientific Study?

Depreciation tables were first introduced to me when studying accounting at the University of Florida. The tables were based on tax schedules and other accounting methods which usually had nothing to do with the actual depreciation of an item. Indeed, if you used tax depreciation tables, some items could be written off immediately despite little … Continue Reading

Determining Depreciation: The Definition of Actual Cash Value Varies Widely Between States

In yesterday’s post, Determining Depreciation–Are Policyholders Getting Ripped Off, I promised to discuss issues of actual cash value and depreciation. The article I am critiquing giving rise to this discussion cited California law regarding actual cash value and then made this statement: In states in which condition is not included in the definition of actual … Continue Reading

Determining Depreciation–Are Policyholders Getting Ripped Off?

Many property insurance company adjusters are required by their companies to determine the amount of depreciation to be taken when arriving at amounts of actual cash value. Many are told to determine this amount by determining the replacement cost and then subtracting depreciation. The question is: How are property insurance adjusters trained to determine depreciation … Continue Reading

Calculating Actual Cash Value, Part 22: Oklahoma

In Redcorn v. State Farm Fire & Casualty Company,1 the insured’s roof was damaged by wind or hail. Although the policy did not define “actual cash value,” it contained an endorsement entitled Roof Surface Losses—Actual Cash Value Endorsement, which provided for roof surface repair and replacement coverage on an actual cash value basis: Roof Surfaces: … Continue Reading

Age as a Factor in Determining Depreciation Used to Calulate Actual Cash Value

In Lains v. American Family Mutual Insurance Company,1 a federal district court in Washington considered two issues involving actual cash value: whether American Family improperly considered age in depreciating the insureds’ personal property loss, and whether American Family improperly depreciated labor costs as applied to the insureds’ dwelling loss. The American Family policy defined “actual … Continue Reading

Calculating Actual Cash Value, Part 20: North Carolina

In Balestrieri v. American Home Assurance Company,1 the plaintiff’s home was destroyed by a fire. At the time of trial, she had been paid over $900,000 based on the estimate of the house’s actual cash value, however she contended that the clear weight of the evidence demonstrated her entitlement to approximately $400-500k more than the … Continue Reading

Why Focusing Recovery Efforts on RCV Only Can Prove Disastrous for Insureds Who Fail to Make a Demand and Present Evidence of ACV

My colleague Ed Eshoo recently wrote a blog addressing how Illinois courts follow the Prevention Doctrine (if an insurer prevents or hinders an insured from complying with the condition to repair/replace the property before being entitled to full replacement cost, then the insured’s failure to repair/replace won’t necessarily bar a recovery of full replacement costs … Continue Reading

In Missouri, ACV For Fire Losses Looks To Fair Market Value, But For Other Losses ACV Is Replacement Cost Minus Depreciation; Plus, Labor Costs Are Not Subject To Depreciation

In researching an issue for a Public Adjuster, I came upon this gem of a case. In Missouri, the argument has always been that when calculating actual cash value you must use fair market value. This is not a good thing for most insureds, especially in big losses. It usually means a meager payment up … Continue Reading

Does Actual Cost Value Equal Fair Market Value When it Comes to Property Damage?

When reading insurance policies it can be confusing to a policyholder regarding the differences in valuation of real property and personal property when terms like “fair market value”, “actual cost value”, and “replacement cost value” are referenced without explanation. Insurance companies use these terms as if everyone should understand their meaning and sometimes, these terms … Continue Reading
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