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Your questions answered: Replacement cost vs. cash value

The option to take actual cash value instead of replacement cost, with claiming replacement cost within 180 days of the date of loss, is a conscious decision by the insured.

By FC&S Editors | Updated on December 20, 2017
The cost to replace is a factor only when that cost is less than the actual cash value of the property. (Photo: iStock)

Analysis brought to you by the experts at FC&S Online, the unquestioned authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to have YOUR coverage question answered — visit the National Underwriter website, or contact the editors via Twitter: @FCSbulletins.

Question: As part of a loss settlement, covered damage to a building is reported in excess of 180 days from the date of loss (but within two years). The delay is not prejudicial to the company. Sections “d” and “e” of the loss settlement are creating some confusion. Is there a way for the insured to be eligible for replacement cost since they cannot notify us of their intent to do so within 180 days? Where would an actual cash value payment fall into this? 

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