Shelter Mutual Ins. Co. v. Goodner (Majority, with Dissenting)Annotate this Case
Appellees’ property was insured under a Mobile Homeowners Insurance Policy issued by Appellant. The policy provided that, in the event of a covered loss, Appellant would pay Appellees the “actual cash value” of the damaged parts of the covered property. The policy defined “actual cash value” to mean “total restoration cost less depreciation.” After Appellees’ property incurred a loss covered by the policy, Appellant made a payment to Appellees representing the estimated cash value with a deduction for depreciation. The deduction for depreciation included depreciation of materials and labor. Appellees filed a petition for declaratory judgment seeking a declaration that Appellant violated the law and public policy by depreciating labor costs in calculating the actual cash value of the covered loss. The circuit court granted Appellees’ motion for summary judgment, concluding that depreciation of labor in the calculation of actual cash value under any policy that pays actual cash value is against the public policy of the state. The Supreme Court affirmed, holding that the practice of depreciating labor in calculating the actual cash value of a covered loss under an indemnity insurance policy violates Arkansas law.