![]() ![]() ![]() This is the standard provision for settling losses under a commercial property policy. (3) If, at the time of loss, the amount of in-surance in this policy on the damaged building is less than 80 of the 'func-tional replacement cost' of the building immediately before the loss, we will pay that proportion of the cost to repair or re-place that part. Program developed by the Federal Highway Administration (FHWA). Actual Cash Valueįor insurance loss settlement purposes, Actual Cash Value is defined as today's replacement cost of the damaged property LESS accumulated physical depreciation. Functional Replacement Cost can be used as a solution in these situations by insuring and, in the event of a loss, rebuilding the property using modern. repair or replace the damaged building on a 'functional replace-ment cost' basis. assistance (with the exception of moving costs). In the case of a partial loss, repairs would be made with less costly materials in the architectural style that existed prior to the loss. With this endorsement, a loss would be settled on the basis of the cost to replace the damaged building, in the event of a total loss, with a less costly building that is functionally equivalent to the damaged building. This is an optional method of settling a covered property loss. In order to collect under the Replacement Cost provision, the damaged property must be repaired/replaced, otherwise the loss will be paid on an actual cash value basis. Functional Replacement Cost or Market Value Coverage Functional replacement cost or market value (also known as repair cost) is the cost to repair or. Replacement Cost, Functional Building Valuation and Actual Cash Value Replacement CostĪn optional method for settlement of covered property losses in which the damaged property is repaired/replaced without any deduction for depreciation. The replacement cost is the amount paid to replace property or personal belongings without any deduction for depreciation. A replacement cost policy helps pay to repair or replace damaged property without deducting for depreciation, says the III.
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