HO 04 90–PERSONAL PROPERTY REPLACEMENT COST ENDORSEMENT

(July 2020)

This endorsement allows losses to personal property (Coverage C) to be covered on the basis of their replacement cost, rather than at actual cash (depreciated) value.

What Is Covered

The optional form applies to only the following:

Personal property	Awnings
Carpeting	Household appliances
Outdoor antennas	Outdoor equipment

However, the above property must also be covered by the underlying homeowners policy. If, for some reason, any category of property is NOT covered by the amended HO, that coverage limitation follows through to this endorsement.

Note: Outdoor equipment is covered, regardless whether it is attached to any structure.

The following types of property will be covered for replacement cost if they are separately described and specifically insured in this policy. They cannot be subject to agreed value loss settlement:

· Jewelry

· Furs and garments trimmed with fur or consisting principally of fur

· Cameras, projection machines, films, and related articles of equipment

· Musical equipment and related articles of equipment

· Silverware, silver-plated items, goldware, gold-plated items and pewterware (not including pens, pencils, flasks, smoking implements or jewelry)

· Golf clubs, golf clothing and golf equipment

Note: Personal property replacement cost coverage does not apply to other classes of property separately described and specifically insured by another source of coverage. Of course, another coverage option is to secure separate (and typically broader) coverage.

Personal Articles Floater

Personal Jewelry and Furs Insurance

Property Not Covered

Certain types of property are not eligible for replacement cost coverage. Losses involving the following classes of items will be settled according to the property's actual cash value at the time of the loss. In no instance will the amount paid out for the loss exceed the actual amount that is required to repair or replace the item(s).

1. Articles of rarity or antiquity that cannot be replaced, including (but not limited to):

· Antiques

· Fine arts

· Paintings

2. Articles whose age or history contributes to their value including (but not limited to):

· Memorabilia

· Souvenirs

· Collectors’ items

3. Articles that are not maintained in good or workable condition.

4. Outdated or obsolete articles that are either stored or not being used.

Example: Jenny Jalopy’s home is burglarized and included in the loss, were electronics stolen from several bedrooms. Their original cost to Jenny was well over $2,000. However, all of them were purchased more than 15 years ago and they were all unused (though functional) VCRs. The HO 04 90 will not provide coverage for these obsolete items.

The reasoning behind the above limitations is solid. A homeowners contract is built on certain assumptions regarding personal property value. A major assumption is that a policy is designed and rated for "normal" property. Normal or regular property consists of property that is:

· fairly new

· commonplace

· readily replaced (not obsolete)

· in ordinary household use and

· has no special (appreciating) value

Restricting replacement cost coverage to normal property is consistent with the idea of indemnification (restoring "pre-loss" condition). Making replacement cost coverage available to any and all property results in a post-loss condition that is a substantial improvement over the pre-loss situation.

Replacement Cost Loss Settlement Condition

Certain procedures apply to all property insured at replacement cost under this endorsement.

The insurance company will pay the least of the following amounts:

Replacement cost at the time of the loss, with no depreciation for deduction.
The entire cost of repairing property at the time of the loss.
The entire limit of insurance that applies to Coverage C, if that is the applicable coverage part.
Any special limits, when applicable, that are separately stated in this policy.
The limit of liability that applies to any item of property that is separately described and specifically insured.

Note: If the entire loss exceeds $500, the insurance company will not pay any more than actual cash value until the repair or replacement is complete. A claim can be made for the loss on an actual cash value basis and then be re-submitted to the insurance company on a replacement cist basis. However, the insurance company must be told within 180 days of the loss date that a replacement cost basis claim will be filed.

Additional Premium

The additional premium for converting Coverage C from an actual cash value basis to a replacement cost basis is developed by applying a factor to the base premium for a homeowners policy, including any premium adjustment for Coverage C limits.

Underwriting Considerations

A company's underwriting rules govern the use of its personal property replacement cost endorsement. Most companies make it available for all homeowners forms except Form HO 00 08 (where available). Some require a specified percentage increase in Coverage C limits and a substantially increased minimum amount of insurance for Forms HO 00 04 and HO 00 06.