Question: I have always understood Agreed Value to do away with the coinsurance clause. I have also understood it to stand alone, meaning no ACV or RC noted on the Dec. page for the particular item showing agreed value. Am I correct or mistaken? If I am correct in both instances, is it correct for…
One of the greatest myths in commercial property (and homeowners) insurance is that, in order to recover on a replacement cost basis, not only must the building be replaced, but it must be replaced on the same premises. The policy language has often been misinterpreted to say this, but as demonstrated below, this isn’t what…
You’d think after 100+ years of application that coinsurance questions would rarely arise. However, few commercial property provisions are debated more often than coinsurance. In this article, we’ll take a look at several coinsurance issues – a couple of them basic, but fundamentally important, and another one a little more complicated – and we’ll also…
The building is currently insured for replacement cost. The insurer did a new valuation and said the policy limit is 70% of the RC value, which would result in a coinsurance penalty for a partial loss. Is the insured who probably won’t rebuild with a total loss better off, if the company will allow it, remaining at RC…
Under the valuation condition in a property policy, you can choose to settle a claim using ACV instead of RC (even if you have RC on the declarations page). In such a case, if there is a coinsurance penalty, is it based on ACV or RC? In this article, which builds on a prior article, we’ll…
Your insured is a contractor. He wants to repair insured damage to his own building to ensure that the job is done right. Or, let’s say he negligently causes damage to a customer’s property that is covered by his CGL policy and wants to make repairs himself. Is the insurer obligated to pay an amount…
The carrier has denied payment for covered damage to our insured tentant’s improvements and betterments based on a clause in the lease that states that all additions, alterations, etc. become the property of the landlord and, consequently, the insured has no insurable interest in that property. The adjuster who wrote the letter advised me that she is instructed…
Your insured buys a building for $250,000. The ACV of the building is closer to $750,000, but the insured only wants to insure the amount of his financial investment. Since coverage is usually based on ACV or replacement cost, underinsurance could result in a huge coinsurance penalty. What can you do?
This is Part 1 of 2 from my Agent & Broker magazine column that generated the most “fan mail” of any columns I’ve written over the years. If you use “toy” valuation systems like room counts or square footage in determining building values (in either commercial or personal lines), you need to read this two-part…
This is Part 2 of 2 from my Agent & Broker magazine column that generated the most “fan mail” of any columns I’ve written over the years. If you use “toy” valuation systems like room counts or square footage in determining building values (in either commercial or personal lines), you need to read this two-part…
