I’ ll not walk away from this fight! It’ s a long-standing battle the industry continues to wage. •
INDUSTRY INSIGHTS of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify us of your intent to do so within 180 days after the loss or damage.
HOMEOWNERS ' POLICY
SECTION I – CONDITIONS... D. Loss Settlement... e. You may disregard the replacement cost loss settlement provisions and make claim under this policy for loss to buildings on an actual cash value basis. You may then make claim for any additional liability according to the provisions of this Condition D. Loss Settlement, provided you notify us, within 180 days after the date of loss, of your intent to repair or replace the damaged building.
“ You see, damage must be discovered within 180 days of the loss to qualify for replacement cost. It’ s beyond that, so the carrier owes ACV only.”
Where within this policy language is discovery required? These unendorsed ISO property policies grant coverage on a replacement cost basis when certain conditions are met based on the policy type:
• The insured has met the coinsurance condition( in the commercial property policy) or the insuranceto-value condition( in the homeowners’ policy);
• The building / structure must be repaired or replaced; and
• Repair or replacement must be made as quickly as possible( a CPP provision).
Nothing requires the loss to be discovered within 180 days. Both policies state that if the above conditions are met, replacement cost is owed.
The claim adjuster continues,“ You are ignoring the 180-day limitation.”
No- I’ m not. It doesn’ t apply to the situation. Did the insured meet the conditions in addition to insuring at replacement cost at the time of the loss? If“ Yes,” the carrier owes replacement cost.
Don’ t believe me just yet. Look closely at the“ 180- day” provision and take special note of WHO makes the choice of ACV versus replacement cost. See it?
Both forms say“ You” – which means the insured- can disregard or make a claim on an ACV basis in lieu of replacement cost. It doesn’ t say the carrier has this option.
But if the“ You” does make this choice, wording says they have 180 days from the date of loss to re-opt for replacement cost.
Nothing in either form allows the carrier to make this decision unless otherwise endorsed. If the insured has met all the other provisions, they are owed replacement cost – even if the loss is discovered more than 180 days after the event.
If the“ You” doesn’ t opt for ACV in lieu of replacement cost, no wording in either of these unendorsed ISO forms allow the carrier to limit payment to ACV. While there are endorsements that change this provision, if the policy lacks those endorsements replacement cost is owed.
Although the carrier may not have reached the level required to be found guilty of bad faith, they are knocking on the door of bad faith if their common practice is refusing to pay replacement cost simply because the loss was discovered more than 180 days after the occurrence.
I’ ll not walk away from this fight! It’ s a long-standing battle the industry continues to wage. •
Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS, president of Boggs Risk & Insurance Consulting( BRIC), has a focus on education, training, risk and claims consulting with the insurance industry. He has worked in the industry since 1990.
NOVEMBER / DECEMBER 2025
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