§ 3.10 Depreciation - Replacement Cost and Actual Cash Value

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 3.10 Depreciation - Replacement Cost and Actual Cash Value

Coverage for damage to property is usually afforded for either actual cash value or for replacement cost, per the terms of the policy.⁷¹ The South Carolina Supreme Court addressed how much the insured should recover under the policy for damage to the covered equipment in South Carolina Electric & Gas Co. v. Aetna Insurance Co.⁷² The policies included an "Electrical Apparatus Clause" that coverage was provided "to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss . . . ."⁷³ The Court considered an earlier decision, Fedas v. Insurance Co. of State of Pennsylvania,⁷⁴ wherein the Supreme Court of Pennsylvania stated:

There enters into cash value of the part destroyed the fact that it was a part of an entire property and the use made of it. It is summed up in the idea 'the cost of replacing in as nearly as possible the condition as it existed at the date of the fire.'
The actual cost of new material, with deduction for depreciation, which is not sufficient to replace the building as nearly as it could be as of the date of the fire, does not comply with the policy, which was to insure against

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