## Facts

- Gilford Titus owned a 1966 Ford Mustang convertible and initially carried only liability coverage under an automobile policy issued by West American Insurance Company.
- Titus later purchased comprehensive coverage for the Mustang, insuring the vehicle for its “actual cash value,” for an added annual premium.
- Over roughly one to one-and-a-half years, Titus substantially restored and customized the Mustang (including repainting, a new canvas top, engine work, extra tires, and magnesium wheels), increasing its value to hobbyists.
- Titus did not inform the insurer or agent of the full extent of the customizations, although the agent knew of some modifications.
- In February 1974, the Mustang was stolen; Titus submitted a comprehensive-loss claim.
- The insurer offered $750; Titus rejected the offer and sued for $2,000 as the car’s actual cash value, plus interest and costs.
- The policy included an appraisal clause for disputes over the “amount of loss”; after the insurer failed to produce its appraiser as directed, the court appointed an umpire.
- The appraisers and umpire agreed on two figures: (1) $2,000 as the market value of Titus’s customized car at the time of theft, and (2) no more than $1,000 for a comparable non-customized vehicle in excellent condition; they left to the court which figure controlled under the “actual cash value” provision.

## Issues

1. Under a comprehensive auto policy promising payment of the vehicle’s “actual cash value,” does theft loss payment reflect the fair market value of the insured automobile in its customized/restored condition at the time of loss, or only the value of a standard (non-customized) comparable model?
2. Does the insured’s failure to disclose the full extent of post-purchase customizations limit recovery under an “actual cash value” provision absent an express policy limitation or proof supporting rescission?

## Decision

- The court held that “actual cash value” was the fair market value of the specific insured automobile as it existed at the time of theft, including value attributable to customization and restoration.
- The court adopted the appraisal panel’s $2,000 valuation as the applicable actual cash value for the loss.
- Judgment was entered for the insured for $2,000, with interest and costs as appropriate.

## Legal Principles

- Unless the policy provides otherwise, “actual cash value” is generally measured by the property’s fair market value at the time of loss (i.e., what it would bring in an open-market sale).
- When an insurance policy insures an automobile for “actual cash value,” the relevant valuation is the market value of the particular insured vehicle in its actual condition at the time of loss, not the value of a hypothetical stock version.
- Lawful customizations and restorations that increase a vehicle’s market price may be included in actual cash value when the policy contains no express limitation excluding such added value.
- An appraisal clause may conclusively fix the factual “amount of loss” (market value), while the court decides the legal meaning of policy terms such as “actual cash value.”
- Absent proof of a material misrepresentation warranting rescission or an express notice requirement tied to valuation changes, incomplete disclosure of improvements does not, by itself, cap recovery at the value of an unmodified vehicle.

## Conclusion

The court required the insurer to pay the theft loss based on the fair market value of the insured Mustang in its customized and restored condition at the time of loss, holding that “actual cash value” was $2,000 as determined through appraisal, not the lower value of a comparable stock vehicle.


Titus v. W. Am. Ins. Co., 143 N.J. Super. 195, 362 A.2d 1236 (Law Div. 1976)