## Facts

- Ivan and Neil Zochert, doing business as Zochert Farms, owned two farm silos insured under a farmowner’s policy issued by National Farmers Union Property & Casualty Company.
- On May 17, 1996, wind damaged the two silos, each approximately twenty years old.
- The policy provided up to $35,000 coverage per silo with a $250 deductible and stated that covered loss would be settled on an “actual cash value” basis, subject to applicable limits.
- The insurer’s adjuster estimated total replacement-cost repairs at $15,255.76 and calculated depreciation of $5,166.96.
- The insurer paid $9,838.80 after subtracting depreciation and the deductible.
- The insureds sued to recover the depreciation amount, arguing “actual cash value” equaled replacement cost without depreciation.
- Both parties moved for summary judgment; the trial court granted summary judgment to the insureds.

## Issues

1. Whether, under the policy, “actual cash value” is synonymous with replacement cost or instead requires deduction of depreciation.
2. Whether summary judgment was proper where the parties disputed the amount of depreciation applied to the loss.

## Decision

- The Supreme Court reversed the judgment for the insureds.
- The court held that “actual cash value” and “replacement cost” were not synonymous under the policy and that depreciation could be deducted in computing actual cash value.
- The case was remanded for determination of the appropriate depreciation amount.

## Legal Principles

- Interpretation of an insurance contract is a question of law reviewed de novo.
- Policy language is enforced as written; a court may not rewrite the contract under the guise of interpretation absent genuine ambiguity.
- “Actual cash value” generally contemplates depreciation and reflects the indemnity function of property insurance, which is to compensate for loss without providing a recovery exceeding the property’s pre-loss value.
- When depreciation is permitted as a matter of law but the record does not conclusively establish the proper depreciation figure, the amount of depreciation presents a factual question precluding final resolution on summary judgment.

## Conclusion

The court held that the policy’s “actual cash value” settlement provision permitted deduction of depreciation from replacement cost, reversed the insureds’ summary judgment, and remanded solely to determine the proper depreciation amount.


Zochert v. Nat’l Farmers Union Prop. & Cas. Co., 576 N.W.2d 531 (S.D. 1998)