The definition established by the California Supreme Court in Jefferson and applied by the Court of Appeal in Elliano and Cheeks were fair and reasonable when considered in light of the fact situations in which they were decided. They should not be construed, in California, or in any other state, as hard and fast rules without room for subjective modifications to provide true indemnity. It is the application of such subjective modification that should be an expression of the insurer’s good faith attempt to provide true indemnity. An inflexible definition of actual cash value appears to work to defeat the true purpose of insurance.
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