{"id":888016,"date":"2016-04-05T16:11:59","date_gmt":"2016-04-05T22:11:59","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=888016"},"modified":"2016-04-05T16:11:59","modified_gmt":"2016-04-05T22:11:59","slug":"connecticut-values-actual-cash-value-as-replacement-cost-value-minus-depreciation","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/connecticut-values-actual-cash-value-as-replacement-cost-value-minus-depreciation\/","title":{"rendered":"Connecticut Values Actual Cash Value as Replacement Cost Value Minus Depreciation"},"content":{"rendered":"

Jason Cieri | Property Insurance Coverage Law Blog | April 5, 2016<\/p>\n

The Broad Evidence Rule has been used in Connecticut to calculate Actual Cash Value<\/a> (ACV) on property damage cases since 1959.1<\/sup> That all changed in 2011 when the Connecticut House of Representatives passed\u00a0Substitute House Bill No. 6238. This bill nullified the Broad Evidence Rule and instead calculated ACV for homeowners and commercial risk insurance properties by taking the Replacement Cost Value<\/a> and deducting depreciation to obtain ACV.<\/p>\n

In 1959, the court in Castoldi<\/em>, noted three separate methods for calculating ACV, ultimately deciding on the Broad Evidence Rule as the best way to arrive at their goal:<\/p>\n

A third method, in order to effectuate more complete indemnity, has been used by the courts and has been described as \u2018the broad evidence rule,\u2019 wherein any evidence logically tending to a correct estimate of the value of the property lost may be considered.2<\/sup><\/p><\/blockquote>\n

The Broad Evidence Rule is an inclusive valuation method. It allows any evidence that can establish the correct property value to a building or personal property. Given the flexibility of the Broad Evidence Rule, no list can be exhaustive. Many states, including New York and New Jersey still use the Broad Evidence Rule to calculate ACV. For an extensive assessment of how your state calculates ACV, check out the blog series by my colleague Shane Smith<\/a>.<\/p>\n

During the minutes of the Connecticut legislature, Representative Megna described this bill as a pro-insured bill when he stated:<\/p>\n

[W]hat this bill does is just really define depreciation under actual cash value under the standard fire policy which is in statute 38a-307. And by doing so, it eliminates the ability of any carrier to use a value less than that of construction \u2013 the cost of construction or repair.<\/p><\/blockquote>\n

Rep. Megna goes on to say,<\/p>\n

The reason why this bill is brought before us, Mr. Speaker, is because way back in 1978 there was a Supreme Court case, I believe it was Sullivan versus Liberty Mutual Insurance, where Liberty Mutual was actual at \u2013 arguing that the depressed real estate market value of a piece of property was the actual cash value and that \u2013 that\u2019s what should be the settlement, not the cost to rebuild this building. And the Supreme Court, more or less, held that the real estate market value could be a factor because we don\u2019t really describe what constitutes actual cash value under statute, nor do we do so in the insurance policies.<\/p><\/blockquote>\n

The court in Sullivan<\/em>3<\/sup> ultimately ruled in favor of Plaintiff\u2019s application of calculating ACV (Replacement Cost Value minus depreciation<\/a>) but this led to an interesting conversation between Rep. Megna and Rep. Sampson on the legislature floor.<\/p>\n

Rep. Sampson\u2014who was in the insurance industry selling insurance for approximately 20 years\u2014argued:<\/p>\n

And I spent a few minutes yesterday contacting some insurance agents that I\u2019ve done business with over the years, and it\u2019s been my experience and theirs, as well, that when purchasing an ACV insurance policy the consumer is informed that they\u2019re basing the coverage for that policy on the market value.<\/p><\/blockquote>\n

Rep. Sampson then gave an example of why market value should play a role in ACV calculations:<\/p>\n

So for instance, this same three-family house in Waterbury that might be 500,000 to rebuild, it might be worth 200,000 in the marketplace. So we would insure at the market value of 200,000. And the understanding is that the person, if there\u2019s a lost to this property and it\u2019s an entire loss, there\u2019s a fire, the house burns down, that client is aware they\u2019re only going to receive the benefit up to the maximum that is listed on the policy\u2026they\u2019re going to be able to get enough money so they can go purchase a like-type of property because they\u2019re going to get back, you know, at least the majority of their money.<\/p><\/blockquote>\n

The one area Rep. Sampson agreed with enacting the bill was for a partial loss. Rep. Megna rejected this notion stating…<\/p>\n

To finish reading this article<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Jason Cieri | Property Insurance Coverage Law Blog | April 5, 2016 The Broad Evidence Rule has been used in Connecticut to calculate Actual Cash Value (ACV) on property damage cases since 1959.1 That all changed in 2011 when the Connecticut House of Representatives passed\u00a0Substitute House Bill No. 6238. This bill nullified the Broad Evidence… Continue reading Connecticut Values Actual Cash Value as Replacement Cost Value Minus Depreciation<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[3],"tags":[6601,454],"class_list":["post-888016","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","tag-actual-cash-value","tag-replacement-cost","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nConnecticut Values Actual Cash Value as Replacement Cost Value Minus Depreciation - 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