A D J U S T I N G T O D A Y CORPORATE OFF ICE 126 Business Park Drive Utica, New York 13502 800.382.2468 Outside U.S. (315) 797.3035 FAX: (315) 272.2054 Editor@AdjustingToday.com WEB ADDRESSES www.AdjustersInternational.com www.AdjustingToday.com PUBL ISHER Ronald A. Cuccaro, SPPA EDI TOR Sheila E. Salvatore ADJUSTING TODAY is published as a public service by Adjusters International, Inc. It is provided for general information and is not intended to replace professional insurance, legal and/or financial advice for specific cases. AT91-2R 3005 PRINTED ON RECYCLED PAPER Copyright © 2011 Adjusters International, Inc. Adjusters International ® and the AI logo are registered trademarks of Adjusters International, Inc. Adjusting Today on the Web — www.AdjustingToday.com View our entire catalog of back issues, download PDF versions, subscribe and contact the editor Follow Adjusting Today on Facebook & Twitter: Facebook.com/AdjustersInternational Twitter.com/AdjustingToday ” replacement cost provision will not live up to its potential, however, unless all conditions of the policy are met by both the insured and insurer. Good underwriting and well-established values that are kept current are essential. Just as important, knowing what you can and cannot expect from the policy’s coverage before a loss occurs is critical to helping the insured manage their risk. It’s also extremely valuable during a property loss adjustment in maximizing recovery. Replacement cost coverage was developed to serve both insureds and insurers. But like all of the provisions in the policy, the degree to which it benefits each depends on how well it is understood and then applied when the insurance is called to deliver! ____________________ 1 For example, Insurance Services Office (ISO) Commercial Property Form CP 00 10 06 07 and Homeowners HO 00 03 10 00 and American Association of Insurance Services (AAIS) Commercial Property Coverage CP-1 ED 1.0 Building and Personal Property Coverage Part CP12 Ed. 1.0. 2 “The language of the policy is to be interpreted in accordance with the way it would be understood by the average person, rather than in a technical sense.” Weyerhaeuser Co. v. Aetna Casualty and Surety Co. 123 Wash. 2d 891, 874 P., 2d 142 (Wash. 1994). 3 Black’s Law Dictionary, 7th Edition, p. 773. 4 It should be pointed out that many courts have ruled that depreciation should not be taken when there is a partial loss. “Under the policy language, the cost of (repair, replacement) that you may consider is the cost of (repair, replacement) with material of like kind and quality within a reasonable time after such loss. In that calculation, you are concerned only with the cost of restoring the building to its condition prior to the fire, and depreciation plays no part.” Pattern Jury Instruction PJI 4:49. 5 ISO Building and Personal Property Coverage Form; CP 00 10 06 07; p. 14 of 14. 6 ISO Building and Personal Property Coverage Form; CP 00 10 06 07; p. 14 of 14. 7 ISO Building and Personal Property Coverage Form; CP 00 10 06 07; p. 14 of 14. 8 ISO Building and Personal Property Coverage Form; CP 00 10 06 07; p. 14 of 14. 9 ISO Homeowners 3 – Special Form HO 00 03 10 00; p.13 of 22. 10 ISO Building and Personal Property Coverage Form; CP 00 10 06 07; p. 14 of 14. Good underwriting and well-established values that are kept current are essential. “ ”
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