When it comes to determining the actual cash value and whether labor can be depreciated in Kentucky, do what insurance education Bill Wilson teaches and RTFP— Read the full policy . While a positive Kentucky federal opinion stated that depreciation could not be written off, it did so on the basis of ambiguity in the policy. 1 This left open the question of whether the Kentucky Department of Insurance would allow insurers to have their policies.
The Kentucky Department of Insurance then issued the following advisory opinion enabling insurers to develop policies that write off work:
This advisory opinion is offered to clarify the Department's interpretation of 806 KAR 12: 095 Section 12: 095), and it applies to the amortization of labor costs in adjusting claims in light of the most recent holding presented in Hicks v. State Farm Fire & Casualty Co. 751 Fed. Approx. 703 (6th ed. 2018). 806 KAR 12: 095 Section 9 (1) is partially stated:
‘… Standards for prompt, fair and equitable settlements applicable to fire and extended coverage policies with compensation cost recovery. (1) If the insurance, contract or certificate allows the adjustment and settlement of first party losses based on replacement cost, the following shall apply:
(a) If a loss requires repair or replacement of an item or part, all physical consequential damage that has occurred during repair or replacement that is not otherwise excluded by the insurance is included in the damage … ”
The Ministry's interpretation of 806 KAR 12: 095 § 9 (1) allows an insurer to prepare loss liability provisions within an insurance to meet the liability between the parties to the agreement. If the policy clearly and unambiguously defines the practice of withholding depreciation on labor when assessing a property claim payment, the Kentucky Insurance Code does not prohibit it.
Policyholders should be aware that insurance companies that advertise that they will save you money on your insurance does not explain that the insurance sold is written in a different way and worse than one that costs more at the point of sale. Insurance is not a commodity and the language of insurance can be changed so that benefits paid out are less when a loss occurs.
The problem is that most people do not receive a copy of the insurance at the point of sale. They are often sold at a price without complete information about significant differences in policy benefits. The state insurance ministries are meant to be watchdogs over this type of behavior and have rules and market behavior surveys on insurance companies and agents that aim to prevent this type of behavior where they sell insurance only on price. With so many variants of property insurance, prices are bound to be different and obvious "twisting" through incorrect comparison is often what happens in advertising and sales.
Thought For The Day  Heaven must be a Kentucky sort of place.
1 Hicks v. State Farm Fire & Cas. Co. No. 18-5104 (6th ed. October 15, 2018).