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A Video Explaining the Interpretation of Actual Cash Value   

https://zalma.com/blog

Determining the actual cash value of an item of personal property is  often difficult and is subject to different interpretations across  multiple jurisdictions. When an insurer and insured cannot agree on the  amount of actual cash value loss they have the right to seek appraisal \\u2014  a limited form of arbitration that may only determine the amount of  actual cash value and loss.  Depending on the wording of the policy or local state law Actual Cash  Value (ACV) can be determined by subtracting from full replacement cost  depreciation, based on the age and usefulness of the property involved.  In other jurisdictions or because of various policy wordings, ACV can be  the difference between the fair market value (FMV) of the item before  the loss and its FMV after the loss.  Some states apply the broad evidence rule and will take into  consideration the use of depreciation, consideration of FMV, or any  other evidence that will provide true ACV to the insured.  Limiting coverage to ACV does result in lower premiums, but it could end  up leaving the insured with a large gap between the amount of the  indemnity recovered after a loss. ACV may not be sufficient to rebuild  the dwelling or replace the contents.  For example, if the structure of the dwelling is in poor physical  condition, is old, or was constructed with a design that is no longer  popular its FMV might be very small with most of its value in the land.  In some cases, the structure even detracts from the full value of the  land and structure so its ACV may be zero while its replacement cost  could be $500,000 or more. It is imperative, therefore, before selecting  a policy limit that the insured understands the structure\\u2019s ACV and its  full RCV.  \\xa9 2021 \\u2013 Barry Zalma  Barry Zalma, Esq., CFE, now limits his practice to service as an  insurance consultant specializing in insurance coverage, insurance  claims handling, insurance bad faith and insurance fraud almost equally  for insurers and policyholders.  He also serves as an arbitrator or mediator for insurance related  disputes. He practiced law in California for more than 44 years as an  insurance coverage and claims handling lawyer and more than 54 years in  the insurance business.  He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma  is the first recipient of the first annual Claims Magazine/ACE Legend  Award. Over the last 53 years Barry Zalma has dedicated his life to  insurance, insurance claims and the need to defeat insurance fraud. He  has created the following library of books and other materials to make  it possible for insurers and their claims staff to become insurance  claims professionals.  Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library \\u2013 https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/  podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4