Originally published by Shane Smith.
Insurance policies may provide several methods to calculate the amount it will pay an insured for a loss. The term replacement cost will be defined or explained in the policy. In a recent federal district court case in Kentucky, Hampton v. Safeco Insurance Company of America,1 the court addressed the meaning of the term “replacement cost”, which, under the particular policy in that case, shall not exceed:
the smallest of the following amounts:
(a) the limit of liability under the policy applying to Coverage A or B;
(b) the replacement cost of that part of the damaged building for equivalent construction and use on the same premises as determined shortly following the loss;
(c) the full amount actually and necessarily incurred to repair or replace the damaged building as determined shortly following the loss;
(d) the direct financial loss you incur; or
(e) our pro rata share of any loss when divided with any other valid and collectible insurance applying to the…
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Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.
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