Deficiencies in Condition

We are required by state law to inspect 100% of new business. Often the inspections reveal deficiencies in the condition of the property that require additional premium until the deficiency is corrected. The deficiency charge rate is $1.00 per $1,000 of coverage for both the dwelling and personal property. The following five areas are those subject to the deficiency charge: [Read more…]

Actual Cash Value (ACV)

The DP-1 and HO-8 policy forms do not define ACV and that can leave it to case lawSome courts have interpreted ACV to mean fair market value, i.e., the amount a willing buyer would pay a willing seller in an arm’s length transaction. Other courts have upheld the insurance industry’s traditional definition: the cost to replace with “like kind and quality” less depreciation. The courts have varied in their rulings as to whether or not depreciation includes obsolescence, e.g., loss of usefulness as a result of outmoded design or construction.

So how do you determine ACV? There is no single correct answer but a useful method is to use the average of:

  1. Current market value (the amount a willing buyer would pay a willing seller in an arm’s length transaction)
  2. Assessed value (from the County Assessor)
  3. Depreciated value (the current replacement cost less depreciation)

If there is a wide variance in the values using the highest value is the only way to be sure there is adequate coverage.

Producers and consumers must work together to in the important process of determining the correct amount of coverage needed.

 

Property Inspections

The Iowa FAIR Plan Association uses an independent inspection firm to inspect all properties, and such inspections are done at the expense of the Plan. All properties written by the Iowa FAIR Plan are subject to inspection for eligibility and pricing.

Inspectors usually will not go inside the property unless there is evidence of a wood burning device or such a device was reported on an application. In such cases, appointments will be made with consumers so inspectors can inspect the wood burning device, check clearances, take photos, etc.

Failure of a consumer to comply with such an inspection request or failure to keep an appointment with an inspector will result in the cancellation of the policy.

 

Policy Change Requests

  • All requests for policy changes must be made in writing via mail, fax, or e-mail.
  • Any requests for decreases in limits will require the signature of the Named Insured(s).
  • Cancellation requests from Policyholders require the signature of all Named Insureds. Requests for backdating of more than thirty (30) days will require proof of replacement insurance.
  • Policies cannot be assigned; new applications will be required at any change in ownership.

 

Minimum Premium Now $250

Summary: Increase in minimum premium charge for Dwelling Property Program.

Effective March 1, 2012 our minimum premium will increase from $100 to $250 for all Dwelling Property policies for new and renewal policies.