REPLACEMENT COST AND THE 180-DAY LIMITATION MYTH By Chris Boggs
I don't know the best way to start this article. I don't know if I should say I'm itching for a fight or if it's better to say that carriers are misinterpreting coverage forms. I'll let you decide. Here's the situation, the insured suffered loss to the building eight months ago (240 days) but did not discover the damage until yesterday (we'll say it's hail damage to the roof). Coverage is written on replacement cost basis and the insured plans to repair or rebuild. Does the carrier owe replacement cost or actual cash value? Whether coverage is written on a homeowners' policy or a commercial property policy, the answer is the same. The carrier owes replacement cost if certain conditions are met. “Wait a minute, Boggs," some might say. “The policy limits the insurance carrier's payout to actual cash value because of the 180-day provision. Take a look:" (For sake of this discussion, the debated wording from both the homeowners' and commercial property policy are presented.)
