Property insurance disputes often turn not on whether a loss occurred, but on how the loss is valued. The recent federal case of Elenz v. State Farm Fire & Casualty Company serves as a reminder that a policyholder can still lose, even with evidence of storm damage, if the proper proof of actual cash value is missing. It also reinforces an important point I recently discussed about New Jersey insurance law, noted in Public Adjusters: Actual Cash Value and Complete Expert Reports are Essential.
The bottom line is that property damage estimates should include an actual cash value figure when repairs or replacements have not been completed. Many courts will not allow recovery of replacement cost unless the insured satisfies the policy’s repair or replacement condition, even when the insurer has underpaid or breached its obligations.
Sherri Elenz sued State Farm after a January 2023 storm allegedly damaged her home, including its rafters. She had not completed repairs by the time of litigation. State Farm moved for summary judgment, contending that Elenz lacked competent evidence on two fronts. First, its engineer found that the irregularities in the rafters were caused by faulty construction, not wind. Without a qualified expert to establish that the storm caused the damage, Elenz could not prove causation. Second, and more significantly, State Farm argued that because Elenz had not repaired the property, her recovery was limited by the policy to actual cash value, which requires evidence of depreciation. Her contractor’s report showed only replacement cost figures and no calculation of depreciation.
Mississippi courts have repeatedly held that depreciation is an essential component of damages for unrepaired items and usually requires expert testimony. State Farm also argued there was no basis for punitive or bad faith damages because it had an arguable reason for its position and had already paid more than $30,000 on the claim.
Elenz opposed the motion by offering a report from an engineer, Jerald Montgomery, who inspected the property and opined that the cracks in the rafters and other signs of lateral stress were consistent with tornadic winds, not with long-standing construction defects. She relied on estimates prepared by her contractors for replacement cost, arguing that depreciation could be established through lay testimony about the age, life expectancy, and condition of the property. She also pointed to State Farm’s own estimate, which used a simple formula to depreciate certain items and capped depreciation at 80 percent.
The judge rejected these arguments and granted summary judgment in favor of State Farm on all claims. The court dismissed Elenz’s punitive, bad faith, and estoppel claims because she did not meaningfully address State Farm’s arguments and because the evidence showed the insurer had an arguable basis for its decision.
As to the contract claim, the court emphasized that since the repairs had not been completed, the policy limited recovery to actual cash value. Depreciation, the court explained, is not an optional figure but a required element of that calculation, and Mississippi precedent makes clear that expert testimony is generally necessary to establish it.
The court further found that Elenz’s suggestion that she could rely on an 80 percent cap from State Farm’s own estimate or on her own evidence of the property’s age and condition was unsupported by the policy or case law. Because she had no admissible evidence to quantify depreciation, her claim failed as a matter of law. The court did not even reach State Farm’s causation argument because the absence of proof of damages was dispositive.
The lesson for policyholders, public adjusters, and their counsel in Mississippi is clear: When a loss involves property that has not been repaired or replaced, the claim must include an actual cash value figure supported by competent evidence. Replacement cost standing alone is not enough, even if the insurer has been slow to pay or has undervalued the claim.
Courts in many jurisdictions, not just Mississippi, require proof of both elements of the formula: the cost to repair or replace and the depreciation that must be subtracted. In complex cases, or where structural components are involved, expert testimony is often essential to meet that burden. Estimates should therefore include depreciation and present an actual cash value number whenever the work has not been completed. Without it, even a seemingly strong claim can lose.
For those interested in this topic, I suggest reading Actual Cash Value Estimates Need To Be Made In Florida—How A Church Lost To Church Mutual, and ACV, RCV, and GCOP: Why the Ninth Circuit’s Ruling Matters to Claims Professionals and Policyholders.
Thought For The Day
“Do not be embarrassed by your failures, learn from them and start again.”
—Richard Branson
Elenz v. State Farm Fire & Cas. Co., No. 3:24-CV-253, 2025 WL 2637670 (N.D. Miss. Sept. 12, 2025). (See also, State Farm’s Motion for Summary Judgment, and Policyholder’s Response to the Motion for Summary Judgment)