In Missouri, the terms “actual cash value” and “fair market value” are synonymous.1
When discussing the calculation of actual cash value of a claim, a question arises whether or not labor can be depreciated.
In Missouri, where the language of a partial fire loss provision of an insurance policy does not allow a deduction for depreciation, an insurance company may not withhold depreciation from its payment to its insured.2 In McMillin, the partial fire loss provision provided for payment of “the actual cost of the damage.”3 Without language expressly allowing for a deduction for depreciation in the event of a partial fire loss, the court found the policy provision did not permit the insurer to withhold depreciation from its payment.4 The court discussed Missouri Revised Statute § 379.150, and stated that even if the policy allowed a deduction from the actual cost to rebuild, that provision would conflict with the statute, which states:
Whenever there is a partial destruction or damage to property covered by insurance, it shall be the duty of the party writing the policies to pay the assured a sum of money equal to the damage done to the property, or repair the same to the extent of such damage, not exceeding the amount written in the policy, so that said property shall be in as good condition as before the fire, at the option of the insured.
The McMillan court also determined that overhead and profit cannot be depreciated for partial losses.5