Question: Our insured’s customized 2013 Dodge Caravan was totaled in an automobile accident. The book value for the van came in at $37,237.09. The insured has coverage for the customized equipment. However, he only paid $28,000 for this van two years ago. Would we owe on the actual cash value total of $37,237.09 shown in the book value, or would we owe on what he paid for the van two years ago? There is a $9,000 increase. Answer: The standard ISO policy states that the amount paid will be the lesser of the actual cash value, or the amount necessary to repair or replace the vehicle with like kind and quality. While the principle of indemnity is to restore the person to whole, they are not to profit from their loss, the policy does not address getting a good deal. While it’s unlikely the vehicle appreciated that much in two years, it is possible the insured got a good deal. If you can cross-check the book value with comparable vehicles in the area at that price, then that is what should be paid. It may be that these vehicles are more expensive now in that area for whatever reason. Analysis brought to you by FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry.