Current through Register Vol. 41, No. 3, September 23, 2024
A. Insurers shall include loss settlement
provisions in accordance with this section.
B. 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; or
c. Awnings.
C. Insurers shall apply replacement cost loss
settlement as follows:
1. Insurers shall apply
replacement cost loss settlement to property described under subsections A and
B of 14VAC5-342-40, including permanently installed flooring. Wall-to-wall
carpeting is permanently installed flooring.
2. Insurers may limit replacement cost loss
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 is less than 80% for a 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 of the Code of Virginia.
D. Insurers may offer functional replacement
cost loss settlement for the property described in subsections A and B of
14VAC5-342-40, 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 property with functionally
equivalent property at a lower cost than would be required to replace the
property with material of like kind and quality; or
c. The amount spent to repair or replace 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,
insurers 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.