Q&A of the Week |
Difference between Agreed Value and Functional Building Valuation
A Pennsylvania subscriber recently asked the following question:
Is there a difference between agreed value and functional building valuation. Which is better?
Insured has four-story building. If loss occurred, he would want only a two-story building.
What form will provide better coverage?
ANSWER: Functional building valuation allows the insurer to pay the least of the following for the repair or replacement of the building: the limit shown in the schedule; in the event of a total loss, the cost to replace the damaged building on the same site, or a different site if required by an ordinance or law, with a less costly building that is functionally equivalent to the damaged building; in the event of a partial loss, the cost to repair or replace the damaged portion of the building with less costly material, if available, in the architectural style that existed before the loss or damage occurred and the amount the insured actually spends to demolish and clear the site of undamaged parts of the building; or the amount actually spent to repair or replace the lost or damaged building with less costly material if available to demolish and clear the site of undamaged parts of the building. (As specified on the ISO Functional Building Valuation form, CP 04 38).
Agreed value is usually an optional coverage on a commercial property form that provides an amount that the insured and insurer agree the property is worth. This requires a submission of a statement of values on an annual basis. This option is often used to avoid coinsurance penalties.
The functional building valuation option may be better if the insured would want to replace his existing building with a less costly one. Read More |
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What's New This Week in FC&S |
Volunteering and the CGL and Other Lines of Insurance Coverage
Individuals who choose to use their time for the benefit of others may be giving more than their time and effort when they choose to become volunteers. Read More |
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Litigation Watch |
Occurrence and Intentional Acts
The liability insurer brought an action against the insured and telephone call recipients for a declaratory judgment that it had no duty to defend or indemnify the insured in litigation to recover for the insured placing telephone calls to play pre-recorded message to solicit business. This case is Old Dominion Insurance Company v. Stellar Concepts & Design, 189 S0.3d 293 (2016).
The underlying lawsuit arose from a previously-settled class action lawsuit wherein the plaintiffs alleged that they were the recipients of phone calls with a pre-recorded message soliciting the plaintiffs to use Stellar for their business needs. The plaintiffs alleged that the calls caused damages because there was a loss of use of their telephones due to the phones being inundated with robotic telephone solicitations. In that trial, the court ruled in favor of the plaintiffs. Read More |
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Fraud of the Week |
Contractor Fraud – New Jersey
AMOUNT: $1.1 Million
Weeks after Hurricane Sandy terrorized the east coast, Price Home Group (PHG) became one of the original contractors approved by the state to rebuild New Jersey with their primary rebuilding program, the Reconstruction, Rehabilitation, Elevation, and Mitigation program (RREM), which is a tax-funded program. Read More |
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FC&S Ask the Experts |
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