The recent opinion in Kimmel v. Massachusetts Bay Insurance Company 1 is a warning for every policyholder lawyer, public adjuster, and policyholder handling a property insurance claim in New Jersey. It is also a reminder that replacement cost coverage can become an illusion if courts allow insurers to deny a claim, pay nothing, and then later argue that the policyholder loses because the policyholder did not prove actual cash value.
Craig Kimmel had a homeowners policy with Massachusetts Bay. A lightning strike caused a tree to fall on his property. Kimmel alleged that the impact caused extensive damage to his home. Massachusetts Bay denied the claim, contending much of the damage preexisted the loss or was otherwise excluded. Kimmel sued for breach of contract and bad faith.
The policy contained familiar replacement cost language. It said the insurer would pay no more than actual cash value until actual repair or replacement was complete. Kimmel had a contractor prepare a repair proposal estimating the cost of repair at $361,015. The contractor’s estimate, like most contractor estimates, did not provide an actual cash value figure. It did not calculate depreciation, and did not otherwise provide a valuation method to derive actual cash value. Kimmel had not completed the repairs.
The Third Circuit affirmed summary judgment for Massachusetts Bay. The court reasoned that because repairs had not been completed, Kimmel could recover only actual cash value. Since Kimmel did not provide evidence of actual cash value, he failed to prove damages, an essential element of a breach of contract claim.
The practical effect of the ruling deserves more scrutiny. The policyholder’s lawyers made a creative and important argument based on the duties after loss provision. The policy required an insured to prepare an inventory of damaged personal property showing quantity, description, actual cash value, and amount of loss. But for damaged buildings, the policy required specifications of damaged buildings and detailed repair estimates. Please note the distinction between real and personal property. If the insurer wanted policyholders to submit actual cash value calculations for building damage, it knew how to say so in the duties after loss. It said so for personal property, but did not make this requirement for buildings.
I thought that this was a strong policy interpretation argument. It follows a basic rule of contract construction that when a drafter uses language in one place and omits it in another, courts should presume the omission was intentional. The policyholder did exactly what the building-damage duty required. He produced a detailed repair estimate. The policy did not expressly tell him to become a depreciation expert before filing suit.
The appellate court avoided this argument by saying it had not been raised before the trial court and was therefore forfeited. While that may be procedurally correct, it leaves policyholders with a troubling practical rule. If a carrier denies coverage outright and refuses to pay anything, the insured may still have to come forward in litigation with a developed actual cash value analysis to avoid summary judgment.
This irony becomes hard to miss. Policyholders buy replacement cost coverage because they often do not have the cash to rebuild first and fight later. The insurer’s promise is supposed to provide the financial bridge to restoration. Yet under this and similar rulings, an insurer can wrongly deny the claim, provide no repair money, force the policyholder into litigation, and then argue that because the policyholder did not complete repairs or provide a separate depreciation analysis, the most the policyholder can recover is actual cash value payments. This ruling turns replacement cost insurance upside down. It is like selling a life preserver that only inflates after the swimmer reaches shore.
The court’s opinion is not precedential, but insurers will undoubtedly cite it. They will argue that a replacement cost estimate alone is not enough where repairs have not been completed. In New Jersey and many other jurisdictions, a repair estimate should not stand alone if the insured has not completed the work. The file should include an actual cash value opinion, a depreciation analysis, or an expert explanation why depreciation should be zero, minimal, or inapplicable to particular repair items.
The broad evidence rule remains important in New Jersey. Actual cash value is not always a simple math problem of replacement cost minus a carrier-selected depreciation percentage. A factfinder may consider all logically relevant evidence bearing on value. But Kimmel teaches that the phrase “broad evidence” does not mean “no evidence.” A contractor’s replacement cost proposal may be important evidence, but courts may require more to let the case reach a jury.
The lesson is that in an unrepaired replacement cost case, prove both numbers. Prove replacement cost because that is the amount needed to restore the property. Prove actual cash value because the policy may limit payment to that amount until repairs are completed. Then prove why the insurer’s depreciation is excessive, unfair, or unsupported.
There is another lesson to preserve every argument early. The policyholder’s duties-after-loss argument was one of the most compelling points in the case, but the Third Circuit said it was forfeited because it had not been raised below. In coverage litigation, a good argument raised too late is like a perfect sail trim after the race is over.
The opinion should also push courts to think more carefully about the difference between a policyholder seeking replacement cost benefits without repairing and a policyholder unable to repair because the insurer denied the claim and paid nothing. Those are not the same. Insurance is supposed to indemnify. It is not supposed to become a procedural maze where the insurer’s denial creates the very condition the insurer later uses to avoid payment.
For those interested in this topic, I suggest reading The ACV Mirage: Insurers Try to Turn Coverage into Scrap Value.
Thought For The Day
“Anyone who’s grown up or lived on the Jersey Shore knows the place is unique.”
—Bruce Springsteen
1 Kimmel v. Massachusetts Bay Ins. Co., No. 25-2274, 2026 WL 1661947 (D. N.J. June 9, 2026). See Kimmel Initial Brief, Insurer Answer Brief, and Kimmel Reply Brief.
