So you think that even though the insured is paying a premium for the value of the new stuff, it still violates indemnification.
Your right, the carrier gave (well, not really gave) the insured something new for something not new – but the insured paid more premium to get new stuff.
If the cost new is $20,000 and they pay a premium based on $20,000, they are not really any better off. The whole premise of insuring to replacement cost is to buy the amount of coverage to put new stuff back.
If the ACV is $15,000 but new stuff is $20,000, paying a premium for $20,000 worth of coverage does not violate indemification.
Also, if I don’t have a RC option, a major loss could put me out of business because of all the additional money I’d have to come up with after the loss (not to mention any BI loss I might suffer if I didn’t purchase that coverage). How is being put out of business indemnification.
If it is valued correctly (which granted most policies are not correctly valued) and I pay the premium I still don’t buy the argument that it violates indemnification.
You’re working under the premise that the ONLY way to recover from the event is to replace with new? Under normal circumstances, this is simply not the case. The WANT is for new, but the NEED is for like, kind and quality.
As stated earlier, the premium is what initiated the RC movement. Granted the insured pays an additional amount to be bettered (RC), but that simply is not adherence to the rule of indemnification just because additional money is paid.
In your examples the “stuff” replaced can always be replaced with new, if that is the decision of the insured, and they participate with the additional cost. Most “stuff” is also available in a not brand new state, at an ACV. In replacing a 10-year-old TV with a brand new one, how is that putting someone back in the position they were before the event? Replacing a 15-year-old roof with a brand new one, is this not betterment? In doing so, the insured’s position is greatly changed becaused they no longer are required to address these issues in the appointed time (saving for this expected expense in the near future) because their schedule starts all over because they have been bettered.
When you deviate from the rule of indemnification, it is no longer insurance, but rather a windfall on an investment.
The form takes care of the “like kind and quality” argument when, under the replacement cost provision, it states:
e. We will not pay more for loss or damage on a replacement cost basis than the least of (1) , (2) or (3) , subject to f. below (this is the ordinance or law exclusion):
(1) The Limit of Insurance applicable to the lost or damaged property;
(2) The cost to replace the lost or damaged property with other property:
(a) Of comparable material and quality; and
(b) Used for the same purpose; or
(3) The amount actually spent that is necessary to repair or replace the lost or damaged property.
So even Replacement cost will replace with like kind and quality if it is available. Right – since that is what the policy says.
The full limit is only available if needed.
So, basically, what you’re telling me is that if one of my client’s 20-year old home burns down they should be “out” the difference between the ACV and RC just because they are “better off” by your argument even though they paid a premium to put back a new one. You wonder why folks don’t like insurance or insurance people.
If I’m to be put back in the same condition that existed before the loss, I should be able to live or operate like I did before the loss without out of pocket expenses due to something I did not want to happen and had no control over.
If I’m punished, I’m not indemnified (indemnification is not all about money).
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So you think that even though the insured is paying a premium for the value of the new stuff, it still violates indemnification.
Your right, the carrier gave (well, not really gave) the insured something new for something not new – but the insured paid more premium to get new stuff.
If the cost new is $20,000 and they pay a premium based on $20,000, they are not really any better off. The whole premise of insuring to replacement cost is to buy the amount of coverage to put new stuff back.
If the ACV is $15,000 but new stuff is $20,000, paying a premium for $20,000 worth of coverage does not violate indemification.
Also, if I don’t have a RC option, a major loss could put me out of business because of all the additional money I’d have to come up with after the loss (not to mention any BI loss I might suffer if I didn’t purchase that coverage). How is being put out of business indemnification.
If it is valued correctly (which granted most policies are not correctly valued) and I pay the premium I still don’t buy the argument that it violates indemnification.
You’re working under the premise that the ONLY way to recover from the event is to replace with new? Under normal circumstances, this is simply not the case. The WANT is for new, but the NEED is for like, kind and quality.
As stated earlier, the premium is what initiated the RC movement. Granted the insured pays an additional amount to be bettered (RC), but that simply is not adherence to the rule of indemnification just because additional money is paid.
In your examples the “stuff” replaced can always be replaced with new, if that is the decision of the insured, and they participate with the additional cost. Most “stuff” is also available in a not brand new state, at an ACV. In replacing a 10-year-old TV with a brand new one, how is that putting someone back in the position they were before the event? Replacing a 15-year-old roof with a brand new one, is this not betterment? In doing so, the insured’s position is greatly changed becaused they no longer are required to address these issues in the appointed time (saving for this expected expense in the near future) because their schedule starts all over because they have been bettered.
When you deviate from the rule of indemnification, it is no longer insurance, but rather a windfall on an investment.
The form takes care of the “like kind and quality” argument when, under the replacement cost provision, it states:
e. We will not pay more for loss or damage on a replacement cost basis than the least of (1) , (2) or (3) , subject to f. below (this is the ordinance or law exclusion):
(1) The Limit of Insurance applicable to the lost or damaged property;
(2) The cost to replace the lost or damaged property with other property:
(a) Of comparable material and quality; and
(b) Used for the same purpose; or
(3) The amount actually spent that is necessary to repair or replace the lost or damaged property.
So even Replacement cost will replace with like kind and quality if it is available. Right – since that is what the policy says.
The full limit is only available if needed.
So, basically, what you’re telling me is that if one of my client’s 20-year old home burns down they should be “out” the difference between the ACV and RC just because they are “better off” by your argument even though they paid a premium to put back a new one. You wonder why folks don’t like insurance or insurance people.
If I’m to be put back in the same condition that existed before the loss, I should be able to live or operate like I did before the loss without out of pocket expenses due to something I did not want to happen and had no control over.
If I’m punished, I’m not indemnified (indemnification is not all about money).