Replacement Cost for Multiple Items

October 29, 2012

I need info on requirements for an insured to be paid holdback.

Our insured has a contents claim involving large and expensive manufacturing equipment, about 150 pieces.

The replacement cost and actual cash value loss and damages in whole for all 150 pieces are agreed and depreciation, on the RC policy, was taken on a line item basis. ACV was paid.

The insured has purchased several large pieces, but not all of the 150 damaged pieces have been replaced..

On the twenty large pieces purchased so far, the insured spent exactly the amount that was settled for on the RC basis for each of the pieces purchased.

The insured has proved the expenses incurred through checks and invoices for the pieces and there is no dispute by the carrier that the insured spent what was agreed for the same as the RC settlement for that piece. The insured has filed a claim for the holdback for each piece that was bought.

The insurer said that the insured must spend at least the aggregate ACV amount of the total claim before holdback claims per piece can be made.

I have never heard of such a thing but cannot locate anything that addresses this; do you have anything?

Texas Subscriber

The form does not address the loss of multiple items. It just states that if the insured wants to make a claim on a replacement cost basis, the replacement cost will not be paid until the lost or damaged property is actually repaired or replaced. In the situation you describe, the property has been replaced, so, in our opinion, the insured should receive the holdback amount on those items. Since the form does not address how replacing some of the items in a multiple-item loss will be paid, the benefit of the doubt should go to the insured.