Our "Ask an Expert" service got a question this week from an agent who represents an insurer who has begun using a Functional Replacement Cost Loss Settlement endorsement on older homes which have construction materials that are obsolete, antique, or custom. This endorsement says that in the event of a claim, the damaged building will be repaired or replaced with less costly common construction materials and methods. The big issue is how to arrive at the Functional Replacement Cost limit.

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