The Assault on Indemnity | PropertyCasualty360

Legal attacks on the principle of indemnification have left the insurance industry in a position that undeniably violates its right to calculate an insured’s economic loss in some jurisdictions, and thus leaves the insured in a “better that” before the loss. (Photo: Andrey_Popov/Shutterstock)

Actual Cash Value (ACV) clauses have existed in insurance policies for over a century. LCA is a valuation method that seeks to determine the appropriate amount to compensate policyholders for their loss and restore them to a position that is no better or worse than if there had been no loss.

Over the past decade, property insurers have been plagued by costly class action legal battles over whether the amortization of the cost of labor used to repair damaged property qualifies for determine the ACV. Prior to these class action lawsuits, litigation tended to focus on whether an insurance policy contained a definition of ACV that differed from the governing law of ACV in a given jurisdiction, and whether that definition limited the ability of an insurer to make a claim. Even in states like New York, which adopted the general evidence rule in 1928, disputes over how to calculate ACV, where an insurer sought to define the meaning of ACV in its policy, continue. for decades, usually to the detriment of insurers.


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