Tag Archives: Replacement Cost

Allstate’s 180-Day Dwelling Replacement Requirement Trumped by the Illinois Standard Fire Policy

Under the powers vested by sections 397 and 401 of the Illinois Insurance Code, the Director of Insurance has promulgated certain regulations which provide for a Standard Fire Policy.1 Under the regulations, all fire insurance policies must “conform to such form of the Standard [Fire] Policy or, if another form is used, shall for the … Continue Reading

California Supreme Court Affirms California Fair Plan Ass’n v. Garnes, and Preserves Homeowners’ Interests

The California Department of Insurance recently issued a press release announcing that the California Supreme Court affirmed the homeowner reimbursement protections recently decided in California Fair Plan Association v. Garnes.1 Back in June, my colleague Kevin Pollack wrote about the recent decision and whether actual cash value means fair market value or replacement cost minus … Continue Reading

In California, Can an Insured Homeowner Recover Full Replacement Cost by Purchasing a Home at Another Location?

The short answer is yes. In Conway v. Farmers Home Mutual Insurance Company, the California Court of Appeal followed several out-of-state authorities in considering the issue and ruling in favor for the insured.1 Chip Merlin raised this issue with respect to Texas back in 2009 – finding that the courts there apply the law a … Continue Reading

Does Actual Cash Value Mean Fair Market Value or Replacement Cost minus Depreciation?

What is an insured, who has an “actual cash value” property insurance policy, entitled to recover when their property is damaged, but not a total loss? Is the insured entitled to the cost to repair/replace the property minus depreciation? Or is the insured’s recovery limited to the property’s fair market value? What if the property’s … Continue Reading

Insurers Must Provide Complete Replacement Cost Estimates

The California Supreme Court issued a unanimous ruling yesterday requiring insurers to communicate “complete” replacement cost estimates to insureds.1 The ruling not only found the regulation requiring this action to be well within the Insurance commissioner’s authority, but found the basis for the regulation to be well founded. It is a wonderful victory for policyholders … Continue Reading

Determining Depreciation–Are Policyholders Getting Ripped Off?

Many property insurance company adjusters are required by their companies to determine the amount of depreciation to be taken when arriving at amounts of actual cash value. Many are told to determine this amount by determining the replacement cost and then subtracting depreciation. The question is: How are property insurance adjusters trained to determine depreciation … Continue Reading

Why Focusing Recovery Efforts on RCV Only Can Prove Disastrous for Insureds Who Fail to Make a Demand and Present Evidence of ACV

My colleague Ed Eshoo recently wrote a blog addressing how Illinois courts follow the Prevention Doctrine (if an insurer prevents or hinders an insured from complying with the condition to repair/replace the property before being entitled to full replacement cost, then the insured’s failure to repair/replace won’t necessarily bar a recovery of full replacement costs … Continue Reading

Connecticut Values Actual Cash Value as Replacement Cost Value Minus Depreciation

The Broad Evidence Rule has been used in Connecticut to calculate Actual Cash Value (ACV) on property damage cases since 1959.1 That all changed in 2011 when the Connecticut House of Representatives passed Substitute House Bill No. 6238. This bill nullified the Broad Evidence Rule and instead calculated ACV for homeowners and commercial risk insurance … Continue Reading

Replacement Cost With Like Kind and Quality and ALE During Construction Awarded: Ambiguous Policy Language is Construed Against the Insurance Company

Most people understand that insurance policies are drafted by insurance companies. There is little to no negotiation of terms between a potential policyholder and the insurance company, so if language is ambiguous it is construed against the drafter—the insurance company. Below you will find details about a recent case out of the Western District of … Continue Reading

Replacement Cost Value After Denial

Recently, I was asked, “if an insurer initially denies a claim and then later pays or is forced to pay, do they have to pay actual cost value, or replacement cost value?” After a little research on the topic, the old joke, if you ask a lawyer a question, their favorite answer is always, "it depends,” … Continue Reading

“Replacement” is a Condition Precedent to Recovering “Replacement Cost” in Kentucky

Insurance policies may provide several methods to calculate the amount it will pay an insured for a loss. The term replacement cost will be defined or explained in the policy. In a recent federal district court case in Kentucky, Hampton v. Safeco Insurance Company of America,1 the court addressed the meaning of the term “replacement … Continue Reading

Nationwide’s “Brand New Belongings”- Cool Commercial, But What Does It Cover?

Like me, you’ve probably seen Nationwide Insurance’s widely aired commercial touting their service, "Brand New Belongings." The eye-catching ads feature a sleek Cat-Women-like heroine coming to the rescue in every homeowner’s worst nightmare situations, stealthily following behind home-invading thieves to replace the items they steal, or swinging into a fire-damaged apartment to switch out smoke-damaged … Continue Reading

Florida Homeowners Are Entitled to Replacement Cost Without First Entering Into a Contract or Incurring the Costs

In property insurance claims, insurers will often pay for repairs at actual cash value (withholding depreciation) and inform the policyholder that once the repairs are actually made or contracted for they will pay the holdback amount and receive the replacement cost value (“RCV”). In Florida, residential policyholders insured under replacement cost value policies are entitled … Continue Reading

Fire Victims: Stop Your Insurer From Deducting the Value of Land From Your Replacement Cost Value

Some victims of the Ft. Collins and Colorado Springs fires who lost their homes opted to purchase a new home elsewhere. Most of their homeowners policies require their insurance companies to pay Replacement Cost Value (“RCV”), which is “the amount it would have cost to replace an identical structure to the one lost on the … Continue Reading

Are Overhead, Profit, and Sales Tax Subject to Depreciation in Texas?

I am often asked whether an insurer can depreciate overhead, profit, and sales tax when it makes an Actual Cash Value (“ACV”) payment under a Replacement Cost Coverage policy. The thinking goes that only the materials used to build a structure can be depreciated because overhead, profit, and sales tax do not lose value over … Continue Reading
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