I am involved in a hail damage property claim insured by policy form BP 00 02 12 99.

The claim settled on a replacement cost basis with depreciation withheld for the damaged roof, siding, and exterior painting. As the agreed replacement of the roof or siding is being performed, is the insured entitled to the depreciation withheld on the siding before the remainder of the repairs are completed?

The carrier has advised that the insured must document incurred repairs that exceed the total actual cash value settlement. It makes more sense to release the depreciation as the work progresses to help maintain a cash flow for the insured.

Does the BOP provide for payment of the withheld depreciation on a per trade basis? Will the policy pay the siding depreciation before the roof is replaced? Content depreciation is released as individual items are replaced; does the same practice apply to the building damage?

Ohio Subscriber

The withheld depreciation should be paid on a per trade basis. While the policy does not explicitly state this, it does say that the insurer will not pay on a replacement cost basis until the lost or damaged property is actually repaired or replaced. So, if the roof is repaired or replaced, then essentially that part of the lost or damaged property has met the requirement of the provision and the withheld amount for the roof should be paid. Nothing in the policy states that every item must be replaced before replacement cost is paid, just that it will not be paid until the lost or damaged property is repaired or replaced. As we read the policy, that can mean on a per trade basis.