We insure sixteen buildings that house 220 condominium units and a clubhouse under a blanket limit of $9.5 million. One of the buildings burned, and it was determined that the replacement cost of that one building was $2.3 million. We estimate that the total replacement cost of all sixteen buildings is $15 million.

I believe the loss should be adjusted at actual cash value because the complex is not insured at 80 percent of its value as required in the policy for replacement cost. Others in my office, however, argue that the full $9.5 million blanket limit should apply to this one building. They believe that replacement cost is payable.

My argument is that when the coverage is written on a blanket basis the loss of one building is a partial loss to the entire complex. I think that the blanket limit on the entire complex must meet the 80 percent coinsurance requirement in order to trigger a replacement cost settlement. Can you shed some light on this debate?