Are California homeowners entitled to collect actual cash value (“ACV”) or replacement cost values (“RCV”) for property claims? It depends on what type of policy you have and whether you suffered a total or partial loss of your property. What’s more, in a few weeks, the California Assembly may vote to change existing law. To understand what homeowners are entitled to, we must first determine whether the policyholder has purchased an RCV or ACV policy and to analyze impact of depreciation.
Continue Reading

Whether your insurance company forced you to sift through soot and ash, trying to recollect what has just been stolen, or trying to identify items damaged by water, going through damaged contents and creating an inventory is an emotionally draining experience that typically comes with little to no guidance by the insurance company. After spending countless hours substantiating lost personal property contents, the insurance company responds with random, and sometimes substantial reductions in the value of the personal property for depreciation, often with little to no explanation as to how it arrived at that conclusion.
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

Most judges and insurance regulators have never worked in property insurance claims departments. For that matter, few insurance attorneys have either (Merlin Law Group’s Javier Delgado worked his way through school as an independent adjuster). But, when I was starting out, an older and experienced GAB adjuster told me they never depreciated labor and the deprecation of repairs rarely occurred.
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 for the depreciation of labor.
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 fair market value of the property at the time of the loss is far less than the amount of money it will take to repair the property minus depreciation?
Continue Reading

I often hear the same complaint from clients: They feel the insurance company has undervalued their personal property after a loss and are frustrated by the insurance company’s valuation and rate of depreciation. The reality is that even when an insured has a “replacement cost” policy, the insurance company can depreciate personal property values because the majority of insurance policies contain language allowing insurers to depreciate the value and first pay out the “actual cost value,” which includes depreciation.
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 use, change in value, or change in condition.


Continue Reading