COMMERCIAL LINES
180 DAY ‘LIMITATION’ IN THE COMMERCIAL PROPERTY POLICY: DAZED AND CONFUSED Within ISO’s Building and Personal Property Coverage Form (CP 00 10), a 180-day limitation applies to three situations:
Key terms and conditions within this language must be reviewed to understand how this provision applies:
• Within the Additional Coverage – Debris Removal. Simply stated, debris removal expenses, up to the eligible limit, are paid only if they are reported within 180 days of the direct physical loss. • Within the Additional Coverage – Pollutant Clean-up and Removal. Like coverage for debris removal, the forms states that is pays for eligible expenses only if reported in writing to the carrier within 180 days of the date of the Covered Loss. • As part of the requirements of the Optional Coverage – Replacement Cost. This use of the 180 day “limitation” in the ISO form is the subject of this article.
• “You…”: The very first word of this provision points to WHO gets to make what decision. The “you” is the named insured. From the beginning it is clear that the named insured is making a decision. • “…actual cash value basis…”: What does the “you” or the named insured get to decide? The named insured is given the option to make a claim on an actual cash value (ACV) basis rather than on a replacement cost basis as allowed when the insured choses this optional coverage. • “In the event…”: Means, “If.” •“…you may still…”: The you/named insured has the option to change his/her/its mind. • “…notify us…”: If the you/named insured changes his/her/its mind, the insurance carrier must be notified. • “…within 180 days after the loss or damage.”: Although the you/named insured has a right to change his/her/its mind regarding ACV versus Replacement Cost, that right expires 180 days after the loss.
ISO Coverage Form Language To begin this discussion, let’s review the relevant “180-day” wording found within the Replacement Cost provision of ISO’s CP 00 10: c. You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead 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.
What does this mean? Simply, the INSURED (not the insurance carrier) has the option to settle the property loss on an ACV basis rather than a replacement cost basis when this optional coverage is chosen.
wisconsin INDEPENDENT AGENT
| OCTOBER 2021 | 17
