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.


HO-8 — Modified Coverage Form

New HO-8 AppDid you know that the Iowa FAIR Plan Association offers a Homeowners policy?  It is the Homeowners 8—Modified Coverage Form. This policy provides named perils coverage on the dwelling and contents on an Actual Cash Value basis.   Actual Cash Value (ACV) is replacement cost less any depreciation.  Also, the policy provides:

  • Coverage A (Dwelling): At least $40,000 and up to $200,000 (ACV)
  • Coverage B (Other Structures): 10% of Coverage A (ACV)
  • Coverage C (Personal Property): 50% of Coverage A (ACV)
  • Coverage D (Loss of Use): 10% of Coverage A
  • Coverage E (Personal Liability): $50,000
  • Coverage F (Medical Payment to Others): $1,000
  • Theft Coverage: $1,000 (ACV)

All applications to the Iowa FAIR Plan Association must be submitted by an agent licensed by the Iowa Insurance Division.

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.