Whether labor can be depreciated in arriving at an actual cash value property loss settlement has been a hot topic of debate over these past five years, and the subject of many Merlin lawyer blogposts. An Illinois appellate court recently weighed in on the issue in Sproull v. State Farm Fire and Casualty Company.1
Continue Reading An Illinois Appellate Court Concludes That Labor Cannot Be Depreciated In Arriving At An Actual Cash Value Loss Settlement

Larry Bache and I are currently handling a devastating fire loss to a powder coating and plating facility located in Watertown, South Dakota. Our clients purchased a replacement cost value policy of insurance – the purpose being to allow them to rebuild after a loss. Unlike actual cash value coverage, which has the intent of placing an insured back in the position it enjoyed prior to a loss, but never allowing it to benefit because a loss occurred, replacement cost coverage is not a pure indemnity agreement. It reimburses an insured for the full cost of repairs, even if that results in placing the insured in a better position than it was before the loss.1
Continue Reading Determining Actual Cash Value in South Dakota

What is the replacement cost value of my classic brown dress shoes? How would you go about determining their actual cash value? You can see them in the photo above along with some Sperry Topsider shoes I have yet to take out of the box. As I am writing this post, I am looking at my Weber gas grill which has been getting a workout since our social distancing started. What questions and considerations should be made for that item in a property insurance adjustment? How are those questions and considerations different when considering replacement cost value and actual cash value if the damage were to real property? What are the considerations if the loss were to a commercial insured rather than covered under a personal property insurance policy?
Continue Reading What Do Chip Merlin’s Old Dress Shoes, New Sailing Shoes, and Weber Grill Have to Do With Replacement Cost Value, Actual Cash Value and Depreciation of Labor?

Depreciation of labor when determining actual cash value is being raised in cases throughout the country with mixed results. In,
Tennessee Tornado Terror and The Insurance Claim Aftermath, I noted that Tennessee recently ruled labor will not be deprecated for tornado policyholders. So, what would be the result if those tornados had gone slightly east and hit North Carolina? Does North Carolina allow insurance companies to depreciate labor of a structure to arrive at actual cash value?
Continue Reading Does North Carolina Allow Depreciation of Labor When Determining Actual Cash Value?

Property Damage attorneys will occasionally run into dispositive motions filed by Insurance Company attorneys looking to dismiss the lawsuit based on the following language from the policy’s loss settlement provision:

We will pay no more than the actual cash value of the damage until actual repair or replacement is complete
Continue Reading Impossibility to Comply: When an Insurance Company’s Conduct Frustrates the Insured’s Ability to Satisfy the Precondition

Depreciation is a major topic with property insurance. It seems like such a “nickel and dime” way to increase profits. So, why are property insurance companies now doing this and having their hired gun attorneys argue that this is the correct way to adjust claims?
Continue Reading How Playing the Float, Taking Depreciation on Labor or Tear Out Is Needed Cheating For Many Insurance Companies

A class action lawsuit filed against Allstate in South Carolina raises the newly raised practice by some insurers of depreciating labor when repairs are made.1 I thought that the lawsuit was very well plead and was surprised to see citations to a law review article written in part by public adjuster Don Wood, and another citation to the Property Insurance Coverage Law Blog.
Continue Reading Can Labor Be Depreciated? Class Action Lawsuit Cites this Blog!

The string of natural disasters that struck California in 2017 and 2018 resulted in new legislation expanding the rights of California policyholders. The California legislature has drafted and introduced new legislation that would continue to expand policyholders’ rights.
Continue Reading Pending California Property Insurance Legislation – A Continued Expansion of Insured’s Rights