VA| Administrative Letter 2025-06 from the Virginia Bureau of Insurance reaffirms that insurers licensed in Virginia must not depreciate labor or other nontangible items—such as taxes, fees, or overheard—in actual cash value (ACV) loss settlements under property insurance policies, including fire, homeowners, and dwelling policies. The Bureau emphasizes that depreciation applies only to physical materials that lose value over time, while labor and nontangible costs do not degrade and should not be included in depreciation calculations. The letter cites Virginia law and regulatory standards, clarifying that depreciating labor and similar items is considered an unfair claims settlement practice. Any questions on this matter can be directed to the Bureau’s Property Casualty Division.
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