We are in week\u00a0twenty-one of this blog series<\/a>. This week, let\u2019s look at Arkansas.<\/p>\n

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In Arkansas, the test for calculating actual cash value is replacement cost minus depreciation.<\/p>\n

The Arkansas Supreme Court was called upon to answer a certified question of law from the U.S. District Court for the Western District of Arkansas, asking whether an insurer in determining the \u201cactual cash value\u201d of a covered loss under an indemnity insurance policy may depreciate the costs of labor when the term \u201cactual cash value\u201d is not defined in the policy. The court answered \u201cNo.\u201d^{1<\/sup> The Arkansas Insurance Department has also issued} Bulletin No. 13A-2013<\/a>, dated July 18, 2013, that provides \u201clabor of any kind related to the repair, rebuild, or replacement of covered property cannot be depreciated.<\/strong>\u201d^{2<\/sup><\/p>\n}

In Arkansas, it is likely that overhead and profit cannot be depreciated based on the language provided by the Arkansas Insurance Department: \u201conly<\/strong><\/em> materials are subject to depreciation for calculating ACV payment.\u201d^{3<\/sup><\/p>\n}