Attorney Spencer Freeman Explains The Differences Between The Two Potential Insurance Policies Involved In A Fire-Loss Litigation?

Ray Hrdlicka – Host – Attorneys.Media

“What’s the difference between the two?”

Spencer Freeman – Fire-Loss Attorney – Pierce County, WA

“So, a replacement cost value policy is exactly that. It’s coverage, and obviously everything is limited by the policy limits that you purchased, but what it does, it’s coverage to rebuild your house. So, in that scenario, you would be able to recover the initial actual cash value of the damage to the house, and then once you’ve rebuilt the house, you will be able to recover the difference between the two. Generally speaking, the actual cash value is the replacement cost value of the house depreciated to present day. That has to do with the age of the house, has to do with the wear and tear on the house, and the condition of the house”

Ray Hrdlicka – Host – Attorneys.Media

“Well, excuse me for being on the other side of the coin here, but in today’s world, how do you depreciate a house where the value of that house has gone up? Especially in major metropolitan areas in Washington here, year after year after year?”

Spencer Freeman – Fire-Loss Attorney – Pierce County, WA

“If I alluded to it being strictly value of the house, I apologize, because that’s not correct. I’m not talking about market value of the house, the sale value of the house. I’m talking about what it costs to construct the house. So, the replacement cost would be the cost to reconstruct the house, which is substantially different, usually, than the market value of the house. Then, the depreciation from the cost to rebuild the house has to do with how old the house is, and the wear and tear and conditions of the house.”