A federal court ruling earlier this year discussed a fairly common scenario of an insurer claiming that no roof damage occurred and even if it did, the policyholder failed to introduce evidence of actual cash value because it only had a replacement cost estimate.1 The point of this post is to show that the safest way to present a property insurance claim in Florida is with a combined replacement cost estimate and an actual cash value estimate. However, fully understanding those concepts and Florida statutes on the subject is important.
Continue Reading Do You Have a Florida Property Insurance Dispute Over Valuation? Understand the Differences Between Replacement Cost Value, Actual Cash Value and How the Broad Evidence Rule Works

Mortgage servicers, banks, and their accountants must sign off under federal regulations that the loans that they package and are underwritten by Fannie Mae comply with certain requirements, including those involving insurance. If the mortgage does not have the proper insurance, it cannot be part of the Fannie Mae backed system. The Florida Senate passed insurance legislation which clearly jeopardizes the chances of home ownership by Floridians with a Fannie Mae mortgage because it is non-compliant. Worse is that when many Floridians buy that type of non-compliant insurance, they may have the additional burden and expense of the mortgage servicer adding force-placed coverage.
Continue Reading Florida Senate Passes Insurance Bill That Will Make Mortgages Non-Negotiable Under Federal Regulations

In one of my recent blog posts, Interpreting the Plain and Ordinary Meaning of an Ordinance or Law Insurance Provision; What Does it Mean to “Incur” and When Does this Happen, I discussed when a policyholder is deemed to have “incurred” ordinance or law damage necessary to trigger coverage under the provision in their Florida insurance policy.
Continue Reading Commercial Property Insurance Policies and Triggering of Replacement Cost Value Damages

Last October we pointed out the alarming number of Louisiana insurers adding to the grief of Hurricane Laura insureds by requesting Proofs of Loss within 60 days and repairs to be completed within 180 days in order to receive replacement cost benefits under their policies. We also sent correspondence to Louisiana’s Insurance Commissioner, James J. Donelon, requesting an Advisory Letter be sent to Louisiana insurers reminding them of Louisiana’s statutory extensions for Proofs of Loss and Replacement Cost Coverage deadlines. On February 11, 2021 Louisiana’s Insurance Commissioner issued Bulletin 2021-02:1
Continue Reading Louisiana Insurance Commissioner Issues Bulletin on Statutory Extensions for Proof Of Loss And Replacement Cost Coverage Deadlines

In unique situations, actual cash value (“ACV”) or replacement cost (“RC”) coverage may not be the best match to meet a property owner’s needs, or even be available. Policies that provide functional replacement cost (“FRC”) valuation, or endorsements that do so, offer an alternative. This valuation method is most commonly used to insure older structures built with obsolete materials and by outdated or custom methods; structures where the RC often exceeds the market value. One ISO endorsement defines FRC as:

‘Functional replacement cost’ means the amount which it would cost to repair or replace the damaged building with less costly common construction materials and methods which are functionally equivalent to obsolete, antique or custom construction materials and methods used in the original construction of the building.1
Continue Reading Functional Replacement Cost – When Will You Encounter It and What To Be On the Lookout For

The term “replacement cost policy” is a misrepresentation by many insurance companies about the product they are now selling. Insurance regulators should not allow the general public to be duped into buying something which is obviously not what the insurance company is promising. Accordingly, I propose that we should consider that unless minimum standards within a policy are met, insurance companies selling any all-risk replacement insurance are required and must warn that they are selling a Non-Standard Non-Replacement Cost Policy. Insurance products that are deemed to be Replacement Cost Policies in the residential market should at least meet the criteria found in mortgage requirements for federal negotiable mortgages.
Continue Reading Homeowners Insurance Policies Differ—The Need For A Standard vs. Non-Standard Replacement Cost Policy Designation

In recent weeks we have been hosting seminars and community events in Lake Charles, Louisiana to educate policyholders of their potential rights and obligations under their insurance policies. Along with the concern that most insureds do not yet have a copy of their full policy—including all forms and endorsements—to guide them through the process, is that those insureds who do have copies of their policies may be misled by the standard terms and provisions of their policies.
Continue Reading Louisiana Catastrophe Related Deadlines Extensions: Filing Proof Of Loss and Replacement Cost Coverage

On August 27, 2020, one month ago, Hurricane Laura made landfall causing catastrophic damage in Southwest Louisiana and beyond. For those who remained or were able to return quickly, it must seem a lot longer. Many of those may have been able to notify their insurers of their loss as soon as communications were restored. And, soon the damage estimates based upon the insurer’s investigation of their losses will begin to trickle in.
Continue Reading Determining Replacement Cost and Actual Cash Value in Louisiana

A recent case involving replacement cost value and actual cash value was recently decided—wrongly.1 The case involved an automobile, and GEICO ripped off its customer by successfully arguing that various items should not be included in actual cash value unless the car is actually replaced. Theoretically, replacement cost and actual cash value are the exact same when an item is brand new. But not if you are insured by GEICO in Illinois.
Continue Reading Replacement Cost Value and Actual Cash Value Should Be The Same For a Brand New Item—But Not If You Are Insured By GEICO

One of the things I enjoy is learning from so many really brilliant people in the insurance coverage business. One of those I am fortunate enough to work with: Ed Eshoo, out of our Chicago office. The other is insurance educator Bill Wilson who writes an extraordinary blog.
Continue Reading Is There a 180-Day Replacement Cost Notice Rule in the Standard ISO Policy?