Current through Register Vol. 41, No. 3, September 23, 2024
A. Insurers shall include loss settlement
provisions in accordance with this section.
B. When providing only basic causes of loss
for the dwelling and other structures, insurers may provide loss settlement on
an actual cash value basis. When providing actual cash value loss settlement,
insurers shall apply actual cash value loss settlement as follows:
1. Subject to the limit of liability,
insurers may pay the smaller of the following amounts:
a. Cost to repair or replace with like kind
and quality; or
b. Actual cash
value of the damaged property.
2. Insurers may apply actual cash value loss
settlement to:
a. Household and personal
property;
b. Outdoor radio and
television antennas; satellite dishes;
c. Awnings; or
d. Property described under subsections A and
B of 14VAC5-341-40, and permanently installed flooring (including wall-to-wall
carpeting) when providing only basic causes of loss set forth in subsection B
of 14VAC5-341-60.
C. If the loss settlement provision in
subsection B of this section does not apply, insurers shall apply replacement
cost less settlement as follows:
1. Insurers
shall apply replacement cost loss settlement to the dwelling and other
structures, including permanently installed flooring. Wall-to-wall carpeting is
permanently installed flooring.
2.
Insurers may limit replacement cost settlement to the following:
a. The limit of liability applicable to the
dwelling or other structures;
b.
The replacement cost of the dwelling or other structures or a part of the
dwelling or other structure on the residence premises and intended for the same
occupancy and use; or
c. The amount
spent in repairing or replacing the dwelling or other structures or a part of
the dwelling or other structure and intended for the same occupancy and
use.
3. The insured may
assert a claim for the actual cash value of the dwelling or other structures
without prejudicing the insured's right to make further claim for the
difference between the actual cash value and the replacement cost in accordance
with § 38.2-2119 B of the Code of Virginia. The claim for the difference
must be made within six months of (i) the last date on which the insured
received a payment for actual cash value or (ii) date of entry of a final order
of a court of competent jurisdiction declaratory of the right of the insured to
full replacement cost, whichever shall last occur.
4. When the repair or replacement cost is
$2,500 or less, insurers shall be liable for the full cost of repair or
replacement before the repair or replacement has been completed.
5. Insurers may apply an insurance-to-value
ratio for replacement cost loss settlement as follows:
a. Insurers may require an insurance-to-value
ratio of no more than 80% before full replacement cost loss settlement
applies.
b. If the
insurance-to-value ratio is less than 80% for the damaged dwelling or other
structure, an insurer may limit its liability for loss to the larger of the
following:
(1) The actual cash value of that
part of the dwelling or other structure; or
(2) That proportion of the full cost of
repair or replacement without deduction for depreciation of that part of the
dwelling or other structure damaged or destroyed that the whole amount of
insurance applicable to the dwelling or other structure for the cause of loss
bears to 80% of the full replacement cost of the dwelling or other
structure.
c. In
calculating the 80% insurance-to-value ratio, insurers shall disregard the cost
of (i) excavations; (ii) underground flues and pipes; (iii) underground wiring
and drains; and (iv) brick, stone, and concrete foundations, piers, and other
supports that are below the under surface of the lowest basement floor, or
where there is no basement, that are below the surface of the ground inside the
foundation walls.
6.
Insurers may provide replacement cost loss settlement on household and personal
property as authorized by § 38.2-2119 B of the Code of Virginia.
D. Insurers may offer functional
replacement cost loss settlement for the property described in subsections A
and B of 14VAC5-341-40, under the conditions outlined in this subsection.
1. Functional replacement cost is only
permitted at the option of the insured.
2. Insurers may not apply functional
replacement cost loss settlement to property that qualifies for an amount of
insurance equal to 80% or more of the full replacement cost of the dwelling or
other structure.
3. Insurers shall
provide the notice required by § 38.2-2119 C of the Code of
Virginia.
4. Insurers may limit
functional replacement cost loss settlement to the following:
a. The limit of liability applicable to the
dwelling or other structures;
b.
The amount necessary to repair or replace the damaged property with
functionally equivalent property at a lower cost than would be required to
replace the damaged property with material of like kind and quality;
or
c. The amount spent in repairing
or replacing the dwelling or other structure or part of the dwelling or other
structure intended for the same occupancy and use.
E. Insurers shall determine loss
to property that is part of a pair or set in a reasonable and fair proportion
of the total value of the pair or set.
F. Insurers shall adjust losses with the
named insured and shall pay the named insured unless another payee is
specifically named.
G. Insurers
shall restore the limits of liability after a loss.
H. Insurers may apply a property deductible
unless prohibited or otherwise limited in this chapter. Insurers may apply a
special property deductible for the following causes of loss (i) wind, (ii)
hail, or (iii) theft. No more than one deductible may be applied to a loss. The
amount of any property deductible may not exceed 10% of the dwelling limit of
coverage.
I. Insurers may (i) take
all or part of the damaged property at the agreed or appraised value or (ii)
repair, rebuild, or replace the damaged property with other of like kind and
quality within a reasonable time. Within 30 days after receiving the insured's
proof of loss, the insurer shall provide notice to the insured of the insurer's
decision to (i) take the property at the agreed or appraised value or (ii)
repair, rebuild, or replace the damaged property.
Statutory Authority: §§ 12.1-13, 38.2-223, and
38.2-2108 of the Code of Virginia.
