Purchase from Craigslist Is Not Replacement Cost

January 27, 2016

We have a theft claim involving a 2005 ATV. Per the insured the ATV is used to service the insured's residence and coverage has been accepted by the carrier. The risk is located in North Carolina and has an HO 03 04 91 Homeowners policy. The policy also has a replacement cost endorsement, HO 04 04 91, which provides replacement cost to personal property.

2. Replacement Cost:

The following loss settlement procedure applies to all property insured under this endorsement.

a. We will pay no more than the least of the following amounts:

1. Replacement cost at the time of loss without deduction for depreciation

b. When the replacement cost for the entire loss under this endorsement is more than $500 we will pay no more than the actual cash value for the loss or damage until the actual repair or replacement is complete.

The carrier has located several 2005 ATVs on Craigslist and is offering to purchase one for the insured less the deductible or pay the insured based on the 2005 ATV they have located. Does the carrier owe for a brand new ATV?

North Carolina Subscriber

You are correct, unless the cost of a new ATV is above the policy limit. Replacement cost in the endorsement is the lesser of replacement cost, full cost to repair at the time of loss, limit of liability, or applicable special limits. None of these include getting a used vehicle off of Craigslist. A used 2005 is deducting for depreciation.

 

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