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A concept as common as the application of a “property deductible” is rarely taught or even considered, it is simply “understood.” The problem is we tend towards the belief that everyone “understands” the application of a property deductible the same way. They don’t.
Carriers seem to believe that a property loss must be discovered within 180 days of the event causing the damage for the policy to respond on a replacement cost basis; even some agents believe this. Well, it just isn’t true. Find out why.
Underinsurance is still a problem. According to CoreLogic approximately 60 percent of homes are underinsured by 20 percent on average. Obviously, this leads to devastating results for the insured, and possibly the agent from an E&O perspective. We know this in the industry, but now the NY Times is reporting it – and they are making serious charges.
After a fire damaged an insured's home, the HO adjuster offered to pay only part of the repair bill, stating that he was taking depreciation off the total. The agent was surprised since this was a current ISO HO-3 policy with replacement cost coverage on the building. Although the carrier can pay ACV until actual repair or replacement takes place, can the actual repair costs be depreciated?
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.
A critical element in the principle of indemnity is that an insured can only collect for a loss in an amount equal to his or her insurable interest in the property. That gives rise to the question, 'What constitutes insurable interest?' In this article, we'll take a look at a common exposure -- an engagement ring -- and who does or does not have an insurable interest in it.
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