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March 25, 2025
Can’t Change Definition of ACV by Class Action

ACV, by Definition, Requires Depreciation from Replacement Cost
Post 5027

See the full video at https://lnkd.in/gUwdsX7z and at https://lnkd.in/gxmkMQcB, and at https://zalma.com/blog plus more than 5000 posts.

This case is a putative class action concerning a commercial property insurance policy. Schoening Investment, LP alleges that The Cincinnati Casualty Company breached its insurance policy by undervaluing an actual cash value (ACV) payment for a covered partial structural loss to one of its properties in Schoening Investment, LP v. The Cincinnati Casualty Company, No. 1:24-cv-137, United States District Court, S.D. Ohio, Western Division (March 13, 2025)

Key Allegations:

Schoening contended that the policy does not allow Cincinnati Casualty to deduct any amount for depreciation from the ACV payments due for partial structural losses. Schoening specifically challenged whether the insurer is entitled to deduct depreciation from such payments at all.

Legal Standard:

This putative class action concerned a commercial property insurance policy and a not uncommon grievance-an insured’s belief that its insurance policy entitles it to more money from its insurer than it received. Specifically, Plaintiff Schoening Investment, LP alleges (on behalf of itself and a putative class of insureds in Kentucky and Arizona) that Defendant The Cincinnati Casualty Company breached its insurance policy by undervaluing an actual cash value (ACV) payment it made to Schoening after Schoening suffered a covered partial structural loss to one of its properties. (By partial structural loss, the Court (and Schoening) means structural damage where estimated repair costs are lower than estimated replacement costs.)

The Court applied Kentucky law, which holds that the interpretation of unambiguous terms in an insurance policy is a matter of law. The Court concluded that Schoening’s depreciation-based challenge fail under the unambiguous policy terms.

Schoening contended that Cincinnati Casualty breached its contract in one very specific way. According to Schoening, the policy at issue does not allow Cincinnati Casualty to deduct any amount for depreciation from the otherwise-applicable ACV payments that would be due for partial structural losses. All Schoening challenges here is whether the insurer is entitled to deduct depreciation from such payments at all.

Cincinnati Casualty contended that the policy terms are sufficiently unambiguous on the depreciation issue that the Court should dismiss the suit. The Court agreed with Cincinnati Casualty.

THE VALUATION PROVISION

The Policy informs the reader that phrases in quotation marks (like “Actual Cash Value”) “have special meaning,” as set forth in “Section G. Definitions.” According to the Definitions Section, “‘Actual cash value’ means replacement cost less a deduction that reflects depreciation, age, condition and obsolescence.”

LEGAL STANDARD

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must present sufficient facts to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

THE UNAMBIGUOUS POLICY TERMS

Schoening asks the Court to manufacture a third valuation method for the Policy which it cannot do. Schoening seeks an ACV-based payment without a depreciation deduction that would mean that, even without selecting the optional replacement cost coverage, insureds covered under the Policy for full replacement cost or RCV.

Further, because the insureds who select the optional replacement-cost coverage can elect to receive ACV-based payments before making repairs Schoening’s reading of ACV would entitle them to receive full-replacementcost-based payments (i.e., without depreciation) without in fact making any repairs directly contravening the Policy wording.

All told, the Court found that, under the unambiguous Policy language, Cincinnati Casualty may deduct depreciation of materials from ACV calculations when evaluating partial structural loss claims.

The Optional Coverage under the Policy provides only two valuation methods-replacement cost and ACV. The latter, ACV, “means replacement cost less a deduction that reflects depreciation, age, condition and obsolescence.” Replacement cost (RCV) is payment “without deduction for depreciation.” Unless and until an insured repairs or replaces a covered property, the replacement-cost based measure is not available to that insured.

Court’s Decision:

The Court agreed with Cincinnati Casualty that the policy unambiguously allows the insurer to deduct depreciation from ACV-based payments for partial structural losses. Consequently, the Court granted the motion to dismiss Schoening’s complaint with prejudice.

ZALMA OPINION

Schoening’s proposed reading would effectively grant insureds who did not pay for nor select the replacement cost coverage, a cost greater than the premium when RCV is not selected, an entitlement to replacement cost coverage, contrary to the policy terms. Schoening tried, by filing a class action, to change the wording of the policy and give the class a benefit for which they did not pay. The court refused to rewrite the policy whose terms and conditions the plaintiff class accepted when it acquired the policy.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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00:08:27
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Post 5089

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Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.

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June 02, 2025
Zalma’s Insurance Fraud Letter – June 1, 2025

ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma

Post 5087

See the full video at and at

Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf

Zalma’s Insurance Fraud Letter – June 1, 2025

See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.

ZIFL – Volume 29, Issue 11

The Source for the Insurance Fraud Professional

Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...

00:08:42
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May 30, 2025
Plain Language of Policy Enforced

No Coverage if Home Vacant for More Than 60 Days

Failure to Respond To Counterclaim is an Admission of All Allegations

Post 5085

See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.

In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.

BACKGROUND

On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.

Plaintiff filed suit ...

00:06:50
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
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Health Care Fraud Trial Results in Murder for Hire of Witness

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In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Immigrant Criminals Attempt to Profit From Insurance Fraud

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The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

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