THE CONTINUING SAGA OF THE 180-DAY ACV
MYTH Written by Chris Boggs, Boggs Risk & Insurance Consulting and KAIA Speaker
I am not necessarily looking for a fight, but I don’ t run away from one when someone else starts it. When insurance carriers misapply( intentionally or unintentionally) policy language – I never run away from that fight.
Here is the situation:
The insured suffered loss to real property eight months ago but did not discover the damage until yesterday( let’ s assume it’ s hail damage to the roof).
• Coverage is written on replacement cost basis.
• Coverage limits are more than adequate to the various replacement cost conditions.
• The insured plans to repair or rebuild.
Here is the question:
Does the carrier owe replacement cost or only actual cash value?
Regardless of whether coverage is written on a homeowners’ policy or a commercial property policy, the answer is the same. The carrier owes replacement cost if policy conditions are met.
“ Wait a minute, Boggs, the policy clearly limits the carrier’ s payout to actual cash value because of the 180-day provision. Take a look at the form.”
OK, let’ s look at this supposed 180-day limitation quoted by insurance carriers in both the ISO Commercial Property and the ISO Homeowners’ coverage forms.
COMMERCIAL PROPERTY POLICY
Optional Coverages... 3. Replacement Cost... c. You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead
18 KANSAS INSURANCE AGENT & BROKER