Tred R. Eyerly | Insurance Law Hawaii
The trial court erred in placing the burden on the policyholder to establish depreciation in determining the actual cash value of the loss. SFR Serv., LLC v. Tower Hill Prime Ins. Co., 2023 Fla. App. LEXIS 3570 (Fla. Ct. App. May 26, 2023).
The insureds’ roof was damaged by Hurricane Irma. They submitted their claim to their insurer, Tower Hill. The cost of repair was assessed at $7,726.94, below the amount of the deductible. Therefore, there was no recovery under the policy. The insureds assigned their claim to SFR Services, LLC, their roofing contractor. SFR submitted a claim to Tower Hill for $162,083.84. Tower Hill refused to pay and SFR sued.
The policy provided for payment of actual cash value of the loss. “Actual cash value” was typically defined as replacement cost minus depreciation. At the close of SFR’s case, Tower Hill moved for a directed verdict, arguing SFR present inadequate proof of “actual cash value” because it did not account for depreciation. The court agreed and issued the directed verdict.
The Court of Appeals reversed. Under normal circumstances, the insured would be responsible for establishing the amount of depreciation in order to arrive at the actual cash value. Here, however, the Tower Hill’s policy placed the burden of establishing depreciation on the insurer. The policy defined actual cash value as “the cost to repari or replace coverage property, at the time of loss or damage . . . subject to a deduction for deterioration, depreciation and obsolescence as determined by us.”
Accordingly, the judgment for Tower Hill was reversed.
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