Opinion ID: 1368309
Heading Depth: 1
Heading Rank: 2

Heading: Questions: First. Did the appraisers, in determining the actual cash value of the insured's building, properly use replacement cost less depreciation?

Text: No. Actual cash value, as used in section 2071 of the Insurance Code, is synonymous with fair market value. (See Martin v. State Farm Mut. Auto. Ins. Co., 200 Cal. App.2d 459, 470 [19 Cal. Rptr. 364]; Hughes v. Potomac Ins. Co., 199 Cal. App.2d 239, 252-253 [18 Cal. Rptr. 650].) Thus, in Martin, the Court of Appeal, in construing the section, said: The loss payable on an insurance policy is not the cost of the car to plaintiffs but its fair market value just prior to its destruction. (P. 470.) (2) It is clear that the Legislature did not intend the term actual cash value in the standard policy form, set forth in section 2071 of the Insurance Code, to mean replacement cost less depreciation. The term appears not only in the average clause, hereinabove referred to, but also in the insuring clause and must be given the same meaning in both. The latter clause insures to the extent of the actual cash value of the property at the time of loss, but not exceeding the ... cost to repair or replace the property.... Since replacement cost less depreciation can never exceed replacement cost, it would not be logical to interpret this clause to mean to the extent of the replacement cost less depreciation, but not exceeding the ... cost to repair or replace the property. (Italics added.) If actual cash value had been intended to mean replacement cost less depreciation, the Legislature would not have used the cost to ... replace the property as a limiting factor, and would have specified as a limiting factor only the cost to repair the property.