In the state of Florida, it is vital for an insured to notify their insurance company of their intent to seek the Replacement Cost Value (RCV) of damages within 180 days of the date of loss. This means if you made a Hurricane Ian claim you have until March 26, 2023, to notify your insurance company that you are seeking payment of your damages at the replacement cost value.
Failure to notify your insurance company of your intent to seek the Replacement Cost Value of your damages within 180 days may result in your insurance company only paying the Actual Cash Value of your damages despite that your policy may have replacement cost coverage.
RCV and ACV are terms used in insurance to indicate the different ways in which a policyholder’s losses can be valued. RCV represents the cost of replacing or repairing damaged property with new items of similar quality, without considering any depreciation. In other words, the cost of replacing the item with the same or similar item brand new.
ACV stands for “Actual Cash Value,” which represents the cost of replacing or repairing damaged property, less depreciation. In other words, the cost of replacing the item, minus the amount of wear and tear that the item had sustained before the loss. The main difference between RCV and ACV is that RCV pays out the full cost of replacement, while ACV pays out the cost of replacement minus depreciation.
Many Florida insurance policies require that an Insured give notice to their insurance company within 180 days that they are seeking the Replacement Cost Value.
3. Replacement Cost
c. You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settled on an actual cash value basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify us of your intent to do so within 180 days after the loss or damage.
SECTION I – CONDITIONS
D. Loss Settlement
e. You may disregard the replacement cost loss settlement provisions and make claim under this policy for loss to buildings on an actual cash value basis. You may then make claim for any additional liability according to the provisions of this Condition D. Loss Settlement, provided you notify us, within 180 days after the date of loss, of your intent to repair or replace the damaged building.
From a plain reading of the above policy language, there is no language requiring actual repair or replacement within 180 days of the loss as a condition for receiving replacement cost benefits.
However, under the policy language, there is a requirement that an insured provide notice within 180 days that they are seeking replacement costs.
It is critical for every insured to notify their insurance company within 180 days of the loss that they are making a replacement cost claim and that they intend to repair or replace the damage to the insured property. Even if you are unsure of your plans for repairs you should advise the insurance company that you are making your claim for replacement cost coverage to protect yourself and your rights under your insurance policy. There is no downside to giving this notice to the insurance company, but a failure to do so could leave you only being able to seek the actual cash value of your damages.
To place the insurance company on notice of your intent you can write to the insurance company and advise as follows:
“This correspondence serves as notification that I the policyholder(s) intend to claim the full replacement cost value of the loss in accordance with the 180-day provision outlined in the policy of insurance. Furthermore, this correspondence provides notice that I am seeking to collect all coverages payable for this loss at RCV under the terms and conditions of the policy to include but not be limited to, replacement cost value coverages, ordinance and law coverages, additional living expenses coverage, and matching related cost for purposes of the repairs.”
In conclusion, to protect your legal rights it is important to notify your insurance company of your intent to file a claim for the RCV of damages within 180 days of the loss.
At Murray Law Group, we want to help make sure you are protected not only from your insurance company but those that try to take advantage of you when you have a claim. If you have any questions about your claim or the rebuilding process, schedule a free consultation today. We make sure the insurance company keeps its promise to you and that you are able to rebuild after the claim.