- 3 - increase to account for postissuance inflation. The policy also provided for extended replacement cost. The extended replacement coverage, however, was limited to 50 percent of the policy’s coverage limits. Replacement was an alternative option and could not be claimed in addition to damage recovery. In the latter part of 1991, after its adjusters examined the property, Chubb paid decedent $478,939.25. That payment represented the maximum possible recovery for loss of decedent’s dwelling and/or its contents under the terms of the policy, as adjusted for inflation. Within 6 months after the fire, reportedly under pressure from the California State Insurance Commissioner, the insurance industry (including Chubb) unilaterally agreed, in connection with the Oakland Hills fire, to disregard the 50-percent cap2 on replacement costs, and to pay the actual cost of replacement, even if that cost exceeded the policy limits. That change in approach occurred after Chubb had paid decedent the maximum recovery possible under the terms of the policy. After Chubb unilaterally offered to pay an amount in excess of its obligations for replacement under the policy, decedent invited a bid for construction of a replacement residence from Krueger Brothers Builders, Inc. (Krueger). Krueger’s initial bid 2 Apparently, the 50-percent cap on replacement was a policy refinement that was employed in decedent’s geographical area.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011