Actual cash value polices should rarely be sold on a typical home. Insurance agents who sell these policies knowing that a mortgage exists are negligent because various federal laws and regulations generally require that negotiable mortgages are to be protected by replacement cost insurance: Property insurance for properties securing loans delivered to Fannie Mae must … Continue Reading
One of the most common questions we hear from our clients has to do with the differences between “actual cash value” and “replacement cost value.” Replacement cost value on its face seems relatively straight forward, but what is “Actual Cash Value” determined under New Jersey law?… Continue Reading
While the term actual cash value is typically found in a property insurance policy, it often is not defined in the policy. Courts around the country use four primary methods to give meaning to the term actual cash value when it is not defined in an insurance policy. Those methods are: (1) replacement cost without … Continue Reading
So far, I have addressed thirty states in this series on calculating actual cash value. This blog is to provide an update on the discussion in my earlier post, Calculating Actual Cash Value, Part 24: Alabama.… Continue Reading
This week in my series on calculating actual cash value, we will look at the Mountain State, West Virginia, whose motto is Montani semper liberi (Mountaineers are always free).… Continue Reading
In the New York class action suit, Mazzocki v. State Farm, 1 A.D.3d 9 (N.Y. 3rd Dept. 2003), the Appellate Court for the Third Department finally clarified the question regarding overhead and profit in actual cash value and replacement cost value claims.… Continue Reading
Sometimes when researching one issue, a case will pop up that isn’t what we were looking for, but nonetheless is worthy of note. While I was trying to help a public adjuster with some case law research the other day, I came across this gem out of Pennsylvania. Back in 1991 the Superior Court of … Continue Reading
While many carriers continue their attempt to exclude overhead and profit from property damage claim payments made on an actual cash value basis, the majority approach across the United States has been to include general contractor overhead and profit in actual cash value payments for losses where repairs would be reasonably likely to require a … Continue Reading
Florida’s Third District of Appeal recently confirmed that insurance carriers are initially obligated to pay the true amount of the actual cash value (“ACV”), not just the insurance company’s estimate of the ACV.1 This obligation exists regardless of whether policyholders intend to use the money to make repairs to their home. The court also confirmed … Continue Reading
This week, Oregon made national news as one of the best locations to view the Great American Eclipse. I realized I had not yet covered Oregon in my series on calculating actual cash value, leading to today’s blog.… Continue Reading
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
The Mississippi Department of Insurance just issued a bulletin regarding the depreciation of labor from Actual Cash Value. This is similar to Arkansas which Shane Smith reported in Arkansas Insurance Department Bulletin on Depreciation of Labor.… Continue Reading
On August 1, 2017, The Arkansas Insurance Department issued Bulletin 10-2017 that rescinds Bulletin 13-B-2013.1 Specifically, Bulletin 10-2017 states “any prior communications or notices from the Arkansas Insurance Department. . . that prohibited depreciation of labor, are hereby rescinded.”… Continue Reading
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
Many property insurance policies provide that until a policyholder actually repairs or replaces damaged property, they are only entitled to the “actual cash value.” Determining how to calculate the “actual cash value” differs from state to state.… Continue Reading
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
This week in the series on calculating actual cash value, we are studying Alabama, nicknamed the “Yellowhammer State,” after the state bird.… Continue Reading
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
A recent class action lawsuit filed in Pennsylvania1 raised an issue that policyholder advocates and public adjusters see all over the country – insurers that try to exclude overhead and profit from property damage claim payments made on an actual cash value basis.… Continue Reading
I recently was involved in a lawsuit in which the insurer paid for some of the costs incurred by the insured in repairing his building following a loss. The insurer’s payment was based on a repair cost estimate prepared by its independent insurance adjuster. The insurance policy provided for payment of a loss on a … Continue Reading
Coinsurance issues were a topic at The National Association of Public Insurance Adjusters meeting yesterday. One suggestion by the panel was to consider whether the policyholder would be better off filing a claim on an actual cash value basis rather than a replacement cost basis to reduce the amount or applicability of a coinsurance penalty.… Continue Reading
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
