We insure an industrial-type steel building. It is constructed on a concrete slab and has no basement. Coverage is written on an open perils basis with the replacement cost option in force.

Recently our insured suffered a fire loss in the amount of $28,000 actual cash value, or $32,500 on a replacement cost basis. The insurance company had the building appraised and they came up with a replacement figure of $196,000. The insured also had the building appraised and arrived at a replacement cost figure of $174,000. Acceptance of the higher figure will result in a coinsurance penalty for the insured.

In studying both estimates, it was discovered that the insurer's estimate included the concrete slab on which the building was constructed. This item is the only significant difference in the two estimates. We contend that this slab should not be included in the value. The building and personal property form CP 00 10 04 02 says that foundations below the surface of the ground are not covered. What is your opinion? Would your answer be different if the loss had occurred under a homeowners policy?