The Illinois Appellate Court affirmed the trial court's ruling that the insured was only entitled to the actual cost value of his loss, not the replacement cost. Lytle v. Country Mutual Ins. Co., 2015 Ill. App. LEXIS 756 (Sept. 30, 2015).
The insured's home was built around 1903. On June 21, 2011, the insured discovered damage to his home because of a severe storm. He made a claim with his insurer, Country Mutual.
The policy contained a depreciation holdback provision. The provision said the insurer would not pay more than the actual cash value until the actual repair or replacement was complete. If the insured elected to accept actual cash value, he would have one year from the date of the loss to repair or replace the damaged property and request the difference between the actual cash value and the replacement cost.
Country Mutual issued to the insured an actual cash value payment of $42,911.84 on August 31, 2011. Country Mutual sent a letter on October 21, 2011, advising the insured that his claim remained open, and Country Mutual was waiting for the work to be completed. A second letter was sent on January 21, 2012, six months before the expiration of the one year period for the repairs to be made.
On April 24, 2012, the insured's adjuster notified Country Mutual that the repairs had come to a standstill because the city required necessary upgrades under its building code. The adjuster suggested a meeting at the construction site with city officials, but Country Mutual never agreed to such a meeting.
When the one year period expired, Country Mutual denied the insured's request for additional payment of the depreciation holdback. The insured filed suit. The trial court granted summary judgment to Country Mutual. The court found that the insured had negotiated a settlement of the actual cash value payment, failed to timely complete repairs, and did not incur any building code upgraded costs. The insured appealed.
The appellate court affirmed. There was no ambiguity in the policy language. The trial court correctly interpreted the clear language of the policy as providing for replacement cost coverage only if actual repairs were completed. It was also undisputed that the insured was paid the actual cost value of the damaged property and had not repaired the property. Accordingly, the insured was not entitled to reimbursement for the depreciation holdback because he did not incur that pecuniary loss.