{"id":893960,"date":"2018-04-12T10:25:26","date_gmt":"2018-04-12T16:25:26","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=893960"},"modified":"2018-04-12T10:25:26","modified_gmt":"2018-04-12T16:25:26","slug":"actual-cash-value-new-jersey","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/actual-cash-value-new-jersey\/","title":{"rendered":"The Proper Standard for Evaluating \u201cActual Cash Value\u201d Under New Jersey Law"},"content":{"rendered":"

Jennifer Van Voorhies | Property Casualty Insurance Law Blog<\/a> | April 12, 2018<\/p>\n

One of the most common questions we hear from our clients has to do with the differences between \u201cactual cash value\u201d and \u201creplacement cost value.\u201d Replacement cost value on its face seems relatively straight forward, but what is \u201cActual Cash Value\u201d determined under New Jersey law?<\/p>\n

This topic was visited by\u00a0Shane Smith\u00a0following Super Storm Sandy in\u00a0Calculating Actual Cash Value, Part 5: New Jersey and New York<\/em>, and I was curious if the criteria had changed following such an influx of first party property damage claims.<\/p>\n

There are typically three general ways to determine Actual Cash Value:<\/p>\n

    \n
  1. market value;<\/li>\n
  2. replacement cost less depreciation; and<\/li>\n
  3. the broad evidence rule.1<\/sup><\/li>\n<\/ol>\n

    The Broad Evidence Rule, in layman\u2019s terms, is a combination of Market Value (what it\u2019s selling for now) and Replacement Cost less Depreciation (how much it costs to replace minus age\/wear & tear\/condition, etc.).2<\/sup>\u00a0In\u00a0Messing v. Reliance Insurance Company<\/em>, the court found \u201cthat the broad evidence rule was most consistent with the principle of indemnity.\u201d3<\/sup><\/p>\n

    The Supreme Court of New Jersey agreed. In\u00a0Elberon Bathing Company v Ambassador Insurance Company<\/em>,4<\/sup>\u00a0a fire case that went to appraisal, the Court held:<\/p>\n

    \u201c[T]hat (1) appraisal based on replacement cost without consideration of depreciation does not measure actual cash value; (2) the proper standard for evaluating \u2018actual cash value\u2019 under New Jersey standard form policy is broad evidence rule. . . .\u201d<\/p>\n

    The\u00a0Elberon<\/em>\u00a0the New Jersey Supreme Court found broad evidence to be the standard because it requires the fact-finder to consider the same evidence an expert would consider relevant to an evaluation; fair market value and replacement cost minus depreciation. The Court does allow the fact-finder to use the criteria as guidelines if the facts of the case are appropriate.
    \n____________________
    \n1<\/sup>\u00a0See<\/em>\u00a0Note, \u201cValuation and Measure of Recovery Under Fire Insurance Policies,\u201d 49 Colum. L. Rev. 818, 820-823 (1949); Cozen, Op. cit., supra, 12 Forum at 648-658; Hinkle, \u201cThe Meaning of \u2018Actual Cash Value,\u2019\u201d 1967 Ins.L.J. 711. See generally Annot., 61 A.L.R.2d 711 (1958).
    \n2<\/sup>\u00a0Messing v. Reliance Ins. Co.<\/em>, 77 N.J.Super. 531, 187 A.2d 49 (1962).
    \n3<\/sup>\u00a0Id.<\/em>\u00a0at 534.
    \n4<\/sup>\u00a0Elberon Bathing Co. Inc. v Ambassador Ins. Co.<\/em>, 77 N.J. 1, 389 A.2d 439\u00a0(1978).<\/p>\n","protected":false},"excerpt":{"rendered":"

    Jennifer Van Voorhies | Property Casualty Insurance Law Blog | April 12, 2018 One of the most common questions we hear from our clients has to do with the differences between \u201cactual cash value\u201d and \u201creplacement cost value.\u201d Replacement cost value on its face seems relatively straight forward, but what is \u201cActual Cash Value\u201d determined… Continue reading The Proper Standard for Evaluating \u201cActual Cash Value\u201d Under New Jersey Law<\/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":[3,9914],"tags":[6601,9895,23,139,9806],"class_list":["post-893960","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","category-insurance-coverage","tag-actual-cash-value","tag-advise-consult","tag-insurance-coverage","tag-new-jersey","tag-replacement-cost-value","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nThe Proper Standard for Evaluating \u201cActual Cash Value\u201d Under New Jersey Law - 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