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Property in 60 Seconds: Texas Federal Court Addresses Depreciation of Labor

A federal district court in Texas has become the latest to weigh in on whether insurance carriers may depreciate labor when determining the Actual Cash Value (“ACV”) of a loss.
On January 11, 2023, in Sims v. Allstate Fire,  the U.S. District Court for the Western District of Texas was asked to decide whether labor could be depreciated as part of the ACV calculation, where the insurance policy at issue left “actual cash value” undefined. The court explained:

the undefined term ‘actual cash value’ as it appears in the subject insurance policy contracts is ambiguous because each party’s interpretation is reasonable. This ambiguity must be resolved in Plaintiffs’ favor, that is, the term “actual cash value” in the subject Policies does not include depreciation of anticipated labor costs.

While Sims is a non-binding trial court decision, the lack of precedential authority on this issue in Texas makes the decision notable.  The opinion is also a reminder about the importance of defining “actual cash value” in states where the ability to depreciate labor is not expressly authorized. 

If you would like additional guidance on this issue, HKR has compiled a Survey of State Law on Depreciation of Labor.

This post was originally published through Horst Krekstein & Runyon’s Property in 60 Seconds Newsletter. If you would like to receive future copies of that newsletter, please contact Sean Dever at