Zochert v. National Farmers Union Property & Casualty Company

Ivan and Neil Zochert, d/b/a Zochert Farms, Inc. (Zochert) (plaintiff), had a farmowner’s insurance policy with National Farmers Union Property & Casualty Company (National) (defendant). On May 17, 1996, two 20-year-old silos covered by Zochert’s policy with National were damaged. National’s adjustor estimated the cost of rebuilding the silos to be $15,255.76. The adjuster also calculated the depreciation of the silos to be $5,166.96. National’s adjuster deducted the depreciation amount and the $250 deductible from the replacement cost, leaving a total amount of $9,838.80, which National paid to Zochert for its loss. Zochert and National agreed that Zochert was entitled to the actual cash value of the damaged property up to the policy limit, which was $35,000 per silo, but disagreed about whether depreciation should be deducted from the calculation of the actual cash value. Zochert sued National to recover $5,166.96, the depreciation amount deducted by National. Zochert and National both filed motions for summary judgment. The trial court granted Zochert’s summary judgment motion, holding that the purpose of the insurance was to permit the insured to rebuild following a loss. The trial court reasoned that if Zochert did not receive the full cash-replacement value of the silos, it would be unable to properly rebuild. In so holding, the trial court stated that insureds who faithfully pay their insurance premiums should be given the benefit of their bargain. National appealed.