ISO Changes Definition of Actual Cash Value

The Insurance Services Office (ISO) has issued form IL 01 02 05 05 entitled “CALIFORNIA CHANGES – ACTUAL CASH VALUE” that appears intended to resolve claims handling difficulties caused by recent California statutory changes in the meaning of the term “Actual Cash Value” (ACV).

 

The article explains that if true indemnity – the intent of first party property insurance – is to be reached it is necessary that the true value of the entire structure be determined. If only some parts of the structure are not subject to depreciation true indemnity will not be determined but, rather, a sum closer to replacement cost than actual cash value will result.

 

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