Insurer Not Required to Replace Damaged Property with Comparable Property

Our insured's 1996 Palfinger Crane Model PK10500 was declared a total loss. We could not locate any comparable cranes. Our appraiser called the manufacturer who said that the crane had a value of approximately $6,000-$7,000 today. As the insured brought it ten years ago for $18,347, the appraiser used a straight line depreciation based on a twenty year life and came up with a value of $9,173. The agent is insisting that we come up with a comparable crane. Even checking competitors of Palfinger, we cannot locate one. Have we satisfied our claim handling requirement?

Maryland Subscriber

Yes, you have satisfied your requirement. The ISO CP 00 10 04 02 form gives the insurer the choice of four options under the Loss Payment clause: 1. pay the value of the lost or damaged property; 2. pay the cost of repairing or replacing the property; 3. take all or any part of the property at an agreed or appraised value; or 4. repair, rebuild, or replace the property with property of like kind and quality. You have chosen option 1., to pay the value of the lost or damaged property. Thus, the agent is not correct in insisting on a comparable replacement.

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