Property insurance coverage disputes typically flip not on whether or not a loss occurred, however on how the loss is valued. The current federal case of Elenz v. State Farm Hearth & Casualty Firm serves as a reminder {that a} policyholder can nonetheless lose, even with proof of storm injury, if the right proof of precise money worth is lacking. It additionally reinforces an vital level I just lately mentioned about New Jersey insurance coverage regulation, famous in Public Adjusters: Precise Money Worth and Full Skilled Reviews are Important.
The underside line is that property injury estimates ought to embrace an precise money worth determine when repairs or replacements haven’t been accomplished. Many courts is not going to enable restoration of substitute value except the insured satisfies the coverage’s restore or substitute situation, even when the insurer has underpaid or breached its obligations.
Sherri Elenz sued State Farm after a January 2023 storm allegedly broken her residence, together with its rafters. She had not accomplished repairs by the point of litigation. State Farm moved for abstract judgment, contending that Elenz lacked competent proof on two fronts. First, its engineer discovered that the irregularities within the rafters have been attributable to defective building, not wind. With out a certified skilled to ascertain that the storm induced the injury, Elenz couldn’t show causation. Second, and extra considerably, State Farm argued that as a result of Elenz had not repaired the property, her restoration was restricted by the coverage to precise money worth, which requires proof of depreciation. Her contractor’s report confirmed solely substitute value figures and no calculation of depreciation.
Mississippi courts have repeatedly held that depreciation is a vital part of damages for unrepaired objects and normally requires skilled testimony. State Farm additionally argued there was no foundation for punitive or dangerous religion damages as a result of it had an debatable purpose for its place and had already paid greater than $30,000 on the declare.
Elenz opposed the movement by providing a report from an engineer, Jerald Montgomery, who inspected the property and opined that the cracks within the rafters and different indicators of lateral stress have been in keeping with tornadic winds, not with long-standing building defects. She relied on estimates ready by her contractors for substitute value, arguing that depreciation may very well be established by way of lay testimony concerning the age, life expectancy, and situation of the property. She additionally pointed to State Farm’s personal estimate, which used a easy components to depreciate sure objects and capped depreciation at 80 %.
The decide rejected these arguments and granted abstract judgment in favor of State Farm on all claims. The courtroom dismissed Elenz’s punitive, dangerous religion, and estoppel claims as a result of she didn’t meaningfully handle State Farm’s arguments and since the proof confirmed the insurer had an debatable foundation for its resolution.
As to the contract declare, the courtroom emphasised that for the reason that repairs had not been accomplished, the coverage restricted restoration to precise money worth. Depreciation, the courtroom defined, just isn’t an elective determine however a required component of that calculation, and Mississippi precedent makes clear that skilled testimony is mostly mandatory to ascertain it.
The courtroom additional discovered that Elenz’s suggestion that she might depend on an 80 % cap from State Farm’s personal estimate or on her personal proof of the property’s age and situation was unsupported by the coverage or case regulation. As a result of she had no admissible proof to quantify depreciation, her declare failed as a matter of regulation. The courtroom didn’t even attain State Farm’s causation argument as a result of the absence of proof of damages was dispositive.
The lesson for policyholders, public adjusters, and their counsel in Mississippi is evident: When a loss includes property that has not been repaired or changed, the declare should embrace an precise money worth determine supported by competent proof. Alternative value standing alone just isn’t sufficient, even when the insurer has been gradual to pay or has undervalued the declare.
Courts in lots of jurisdictions, not simply Mississippi, require proof of each parts of the components: the price to restore or exchange and the depreciation that have to be subtracted. In advanced instances, or the place structural elements are concerned, skilled testimony is commonly important to fulfill that burden. Estimates ought to due to this fact embrace depreciation and current an precise money worth quantity at any time when the work has not been accomplished. With out it, even a seemingly sturdy declare can lose.
For these on this matter, I recommend studying Precise Money Worth Estimates Want To Be Made In Florida—How A Church Misplaced To Church Mutual, and ACV, RCV, and GCOP: Why the Ninth Circuit’s Ruling Issues to Claims Professionals and Policyholders.
Thought For The Day
“Don’t be embarrassed by your failures, study from them and begin once more.”
—Richard Branson
Elenz v. State Farm Hearth & Cas. Co., No. 3:24-CV-253, 2025 WL 2637670 (N.D. Miss. Sept. 12, 2025). (See additionally, State Farm’s Movement for Abstract Judgment, and Policyholder’s Response to the Movement for Abstract Judgment)
