Property insurance policies typically require that the insured repair or replace damaged property before recovering on a replacement cost value (RCV) basis. Until then, the insured is entitled only to the actual cash value (ACV) of the damaged property. The U.S. District Court for the District of New Jersey recently decided a case involving the proper method of calculating the insureds’ loss under a homeowners’ insurance policy following damage to the insureds’ property from Superstorm Sandy. In Giacobbe v. QBE Speciality Ins. Co., 2018 U.S. Dist. LEXIS 77076 (D.N.J. May 8, 2018), the plaintiff insureds contended that they were entitled to the RCV of the damaged property despite the fact that they had not repaired or replaced the property. The insurer moved for summary judgment, arguing that the plaintiffs were entitled only to ACV and that the Plaintiffs failed to offer sufficient proof of damages, i.e., that the ACV exceeded what the insurer paid.

The policy provided that the insurer “will pay no more than the actual cash value of the damage until actual repair or replacement is complete.” The court found no ambiguity in this policy language, and the plaintiffs neither supplied an alternate interpretation nor disputed that they had not completed repairs. Instead, the plaintiffs argued that they were unable to complete repairs because the insurer “failed to fully compensate the Plaintiffs for all the covered damages under the . . . policy.” The court found this argument unavailing, holding: “Absent the completion of repairs, a state of affairs the Plaintiffs admit, the replacement cost procedures do not apply, and Plaintiffs are only entitled to actual cash value.” The court therefore granted the insurer’s motion for summary judgment on this issue.

The court also granted the insurer’s motion for summary judgment on the issue of the plaintiffs’ failure to offer sufficient proof of damages. Having established that the plaintiffs were entitled only to the ACV of the damaged property under the policy, the court found that the plaintiffs offered no evidence of the “actual cash value of damage to the insured property [the insurer] has failed to pay.” The plaintiffs argued that, under the “duties after loss” provision in the policy, they had no obligation to “establish the Actual Cost Value of their claim as part of their recovery.” The court found the plaintiffs’ reliance on this provision misplaced, explaining that “[t]he issue is not what requirements the Policy places on an insured to begin or perfect a claim” but rather “what a plaintiff must show in response to a motion for summary judgment on her breach of contract claim.” Because plaintiffs bear the burden of proving all elements of their claim, including damages, and because the plaintiffs failed to offer any evidence that the $3,893.98 ACV payment by the insurer was insufficient, the court found that the plaintiffs failed to offer sufficient evidence as to an essential element of their claim and therefore granted the insurer’s motion for summary judgment.

Giacobbe provides a useful analysis of recoverable damages in the context of property insurance policies.

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