Property Insurance: Loss Valuation and Avoiding Valuation Mistakes

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Tuesday, March 2, 2021

Recorded event now available

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Course Materials

This CLE course will guide counsel through complex loss valuation issues under property damage policies when property, including real property and improvements, has been partially or completely destroyed. The program will discuss the methods for calculating replacement cost value (RCV) and actual cash value (ACV) losses, highlight and discuss special considerations and problems that arise when valuing certain types of losses, and review relevant case law. The panel will also offer best practices for avoiding common valuation errors and how insurance counsel can manage policyholder expectations.


The goal of property insurance is to "indemnify" the insured: to return the insured to essentially the same condition (financial or otherwise) enjoyed before the loss with no improvement or betterment. The insured and the insurance company often have differing views about how to determine value.

The typical property policy will pay the insured the ACV of the loss, but many policies do not define "actual cash value," leading to litigation. Property owners can purchase RCV policies, but the insurer is often obligated to make an upfront payment based on the estimated ACV. And what constitutes "replacement" can be a complex and disputed issue. Equally critical is avoiding valuation mistakes.

Courts apply three tests to calculate ACV: (1) the fair market value; (2) replacement costs minus depreciation; and (3) the broad evidence rule, which is becoming the norm. Each of these methods is far more complicated than they sound, none is satisfactory, and none is easily applied across all types of losses. Counsel must understand the nuances of each method and how other aspects such as co-insurance and endorsements (or the lack of) affect loss valuation.

Listen as our experienced panel brings clarity to this complicated and often litigated issue of value property losses.



  1. Actual cash value vs. replacement cost coverage defined and distinguished
  2. Actual cash value coverage
    1. Introduction
    2. Calculation of actual cash value
    3. Application to a total and partial loss
  3. Replacement cost coverage
    1. Introduction
    2. The requirement of actual repair or replacement
    3. Related replacement cost valuation problems: partial losses
    4. Contractual time limits on replacement of damaged property
    5. Quality issues
    6. Location restrictions
    7. Effect of code changes
  4. Co-insurance
  5. Endorsements


The panel will review these and other critical issues:

  • What constitutes a "loss"?
  • What is the "broad evidence" method of calculating ACV?
  • What is "replacement" coverage, and why are policyholders often surprised?
  • Does the insured's intention about the future use of the damaged property matter?
  • How does the analysis change if there is only a partial loss of property?
  • What are the most common types of valuation mistakes, and how can they be avoided?


Held, Jonathan
Jonathon C. Held

President and CEO
J.S. Held

Mr. Held has consulted on many of the largest and most complex catastrophic insurance claims in history, including the...  |  Read More

Raschke, Heidi
Heidi Hudson Raschke

Carlton Fields

Ms. Raschke has spent her legal career representing commercial insurance clients in complex coverage disputes. She...  |  Read More

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