Yes. Most homeowners wisely purchase replacement cost insurance. This type of coverage protects you by providing coverage for the full cost to repair or replace damaged property following a loss. But unfortunately, for a variety of historical reasons, most modern replacement cost policies require the insured to repair or replace the damaged property prior to recovering its full replacement cost. However, as strange as it may seem, most insurance policies do not define the term actual cash value. Thus, what constitutes actual cash value has traditionally been left to state regulatory authorities and caselaw. As recently as September 28, 2008, the Texas Commissioner of Insurance issued Bulletin No. #B-0068-08 that defined the standard method for determining the actual cash value of a structure under a replacement cost policy to be the reasonable and necessary expenses to repair or replace the damaged property, less proper deduction for depreciation. These expenses include the services of a prospective contractor without deduction for overhead, profit and taxes.

Frequently Asked Questions

 


Q: I have a replacement cost policy, but my insurance carrier only paid me the actual cash value of my loss. Do I have to actually make the repairs before I can receive the full replacement cost?

A: Yes. Most homeowners wisely purchase replacement cost insurance. This type of coverage protects you by providing coverage for the full cost to repair or replace damaged property following a loss. But unfortunately, for a variety of historical reasons, most modern replacement cost policies require the insured to repair or replace the damaged property prior to recovering its full replacement cost. However, as strange as it may seem, most insurance policies do not define the term "actual cash value". Thus, what constitutes actual cash value has traditionally been left to state regulatory authorities and caselaw. As recently as September 28, 2008, the Texas Commissioner of Insurance issued Bulletin No. #B-0068-08 that defined the standard method for determining the actual cash value of a structure under a replacement cost policy to be the reasonable and necessary expenses to repair or replace the damaged property, less proper deduction for depreciation. These expenses include the services of a prospective contractor without deduction for overhead, profit and taxes.



Durrett Law Firm is located in Houston, Texas, and serves clients in the following surrounding TX areas:

Counties: Harris County, Ft. Bend County, Brazoria County, Galveston County, and Jefferson County.
Cities:  Houston, Pasadena, Beaumont, Galveston, Bellaire, West University, Friendswood, Humble, Katy, Pearland, Tomball, Spring, South Houston, Webster, Waller, Missouri City, Bryan, Willis, Conroe, Baytown, and Stafford.

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2401 Fountainview Dr
Suite 450
Houston, TX 77057
Phone: 713-623-6881

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2401 Fountainview Dr
Suite 450
Houston, TX 77057
Phone: 713-623-6881

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