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Is there a 180-day cost notification on replacement costs in the standard ISO policy? | Real Estate Insurance Coverage Blog



One of the things I like is learning from so many really brilliant people in insurance coverage. One of those I'm lucky enough to work with: Ed Eshoo, from our Chicago office. The other is insurance educator Bill Wilson who writes an extraordinary blog.

This afternoon on Tuesdays at 2 with Chip Merlin I will go through the common cases where loss occurs with property insurance claims and how to Avoid them. Most standard policies require that the cost of compensation be paid before insurers have to pay more than the actual cash value. These policies also discuss a time period of 180 days.

Ed Eshoo wrote a blog about this in, Compensation cost coverage and 1

80 day reporting requirements . Ed concluded:

In practice, the requirement of 180 days' notice to receive compensation for compensation costs should never be an issue. Most public adjusters I have spoken to have told me that their practice is to notify the insurer in writing well before the 180-day deadline (a) that the insured incurs a compensation cost and (b) that the insured intends to repair / replace the damage to the insured property. Although the insured is uncertain about his or her future plans, I see no disadvantage in giving such a notice.

Bill Wilson wrote a blog after a recent FC&S answer to this question in, The 180 Day ACV Vs. RC Notice Myth . The two articles have many similarities and Wilson concluded:

The only time the 180-day limitation is triggered is IF the insured actually requests an initial ACV recovery and this is not the case for these types of claims.

I believe this reading is consistent with the insured's reasonable expectations of the coverage for which their premium was paid, is the correct interpretation as equity and is the clear and unambiguous meaning of this language. The RTFP doctrine prevails.

P.S. Another myth is that the insured must actually reimburse the property within 180 days of the loss in order to recover on an RC basis. That is not what the policy language above says. The insured must only notify within 180 days that the insured intends to recover on an RC basis.

I hope you read the analysis from both and can participate in today's discussion. Here is the link.


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