While I acknowledge Clift v. Fulton Fire Insurance Company, 315 S.W.2d 9 (Tenn. Ct. App. 1958), cert. denied, provides a rule for allowing valuation of property under a somewhat “elastic” standard of “value to the owner,” this ambiguous standard should not apply where the valuation provisions of property coverage are specifically set forth in the policy. For instance, most policy provisions now provide that valuation will be based upon an “actual cash value” basis until such time as repair or replacement has occurred. Once repair or replacement has occurred, the insured may be entitled to additional amounts up to the cost of replacement (where replacement coverage is afforded). 

Older cases like Clift do not rely upon policies containing the definition of “actual cash value,” a term defined by many modern policies. That definition, widely found in policies today, is similar to the following:

“Actual Cash Value” means replacement cost less a deduction that reflects depreciation, age, condition and obsolescence.

Where similar valuation provisions exist, and particularly where component terms are defined by the policy, I think it would be error for a court to step outside of the definition and apply any other valuation measure, whether it be “value to the owner” or some other measure of damage.  Our law has long held that courts are not at liberty to rewrite an insurance policy, even where the court does not favor its terms.  Merrimack Mut. Fire Ins. Co. v. Batts, 59 S.W.3d 142, 148 (Tenn. Ct. App. 2001), perm. app. denied.

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Photo of Parks Chastain Parks Chastain

Parks T. Chastain is a member of the law firm of Brewer Krause Brooks Chastain & Meisner, PLLC. He graduated from the University of Louisville, where he earned a B. S. in Sociology, awarded with high honors, in 1986. He earned his J.

Parks T. Chastain is a member of the law firm of Brewer Krause Brooks Chastain & Meisner, PLLC. He graduated from the University of Louisville, where he earned a B. S. in Sociology, awarded with high honors, in 1986. He earned his J. D. also at the University of Louisville, Brandeis School of Law, where he graduated cum laude. He served as editor of the Journal of Law & Education, was a two year member of the National Moot Court Team, and a member of the prestigious Brandeis Society. He was admitted to the Tennessee Bar in 1989.

Mr. Chastain represents insurers on a state and national basis in the investigation of first party claims, and in litigation arising from first party and third party coverage disputes. Read More…