Replacement Cost and Purchase of New Dwelling

On a Replacement Cost Dwelling Package or Homeowners policy, an insured wants to take an ACV settlement on the dwelling and purchase another dwelling to make claim for the remaining available funds. The dwelling being purchased needs repairs and the cost to purchase it is less than the replacement cost of the original dwelling. May the insured make a claim for thecost of repairs to the new dwelling up to the available loss settlement amount once he has closed on the new house?

Kentucky Subscriber

The policy is a contract for the existing property, not a new property. The claim payment is for the property that was damaged, not to repair a new property that was never on the policy. If the insured wants to receive full replacement cost, he needs to purchase an intact dwelling for that amount. Otherwise, the insured has made the decision to take only ACV because he opted to buy a home in lesser condition.