North Carolina Supreme Court Supports Calculation of ACV Including Depreciation of Labor

A North Carolina policyholder filed suit against his homeowner’s insurance company after they calculated the Actual Cash Value (ACV) of his home’s repair by depreciating both property and labor costs. While the base policy neglected to define ACV, a separate roof coverage addendum stated the ACV would be determined by deducting depreciation from the cost to repair or replace the damaged roof. The policyholder claimed the insurer should have only depreciated the material costs not the labor and material costs. The North Carolina Supreme Court affirmed the court’s decision that the addendum’s definition “must be read in harmony with the remainder of the policy.” They also held the term “depreciation” in this policy clearly included depreciation of both material and labor costs. Read more about the case and how North Carolina’s could impact decisions in other jurisdictions which have been split in decisions over whether ACV includes depreciation of both labor and materials.