Arkansas Supreme Court says Insurance Company cannot depreciate labor costs

When an insurance company pays a claim with an actual cash value for damages provision, a lot of Insurance Companies try pay the labor portion of the claim with deprecation taken out.

In the recent certified question to the Arkansas Supreme Court, the court held that when determining the “actual cash value” of a covered loss under an indemnity insurance policy, an Insurance Company may not depreciate the costs of labor when the term “actual cash value” is not defined in the policy.

This is good case to clear up the fact that, labor, in repairing damage to a home is an item that does not depreciate.  Depreciation is for hard goods like; structures, finishing, or materials, in the fact that over time they lose this value.

See the case here:

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