On October 31, 2025, the Virginia Bureau of Insurance (Bureau) issued Administrative Letter 2025-06 to address whether labor expenses and other nontangible items may be depreciated in "actual cash value" (ACV) loss settlement calculations under property insurance policies that contain ACV or replacement cost loss settlement conditions.
The Bureau states that the depreciation of labor and other nontangible items, like taxes and fees, is not permissible under Virginia law as they do not lose value or degrade over time. The Bureau has found the depreciation of labor and other nontangible items in the definition of ACV to be an unfair claims settlement practice.
Please see Administrative Letter 2025-06 for more information. For any questions regarding the letter, please contact BureauofInsurance@scc.virginia.gov.