as of 2010 there were twenty-three states where courts had adopted the broad evidence rule, eleven states that concluded actual cash value is equivalent to fair market value, four that maintained actual cash value is replacement cost less depreciation, two that found it is replacement cost with no depreciation, and ten where no decisions on the topic were found.
Currently, the broad evidence rule is the most frequently used method of ascertaining actual cash value.
Over time, a number of elements have been identified in court decisions as relevant to determining actual cash value under the broad evidence rule.
The broad evidence rule says that everything that bears on the value of property should be considered.
The strength of the broad evidence rule is its inclusiveness.
The market value of such a building might have been $200,000 or less; many insurance companies argued that the broad evidence rule indicated that ACV for such a building was close to $200,000.
Using every standard of value having a bearing on a subject property is known as the application of the broad evidence rule.
Using the broad evidence rule has now become another possible option in determining the actual cash value of insured property in the event of a loss.
The ramifications of the application of the broad evidence rule are many, and reviewing each would require another article.
The broad evidence rule
considers both replacement cost less depreciation and market value, and any other evidence relevant to determining value.
The broad evidence rule -- a judicious application of either one or two to the unique circumstance of the claim, whichever is more favorable to the insured.
Although the broad evidence rule seems to be the fairest to both insured and insurer, the California Court of Appeals has recently thrown a monkey wrench into the works.