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November 00, 2016  

 Q&A of the Week
Difference between Agreed Value and Functional Building Valuation

A Pennsylvania subscriber recently asked the following question:

Is there a difference between agreed value and functional building valuation. Which is better?

Insured has four-story building. If loss occurred, he would want only a two-story building.

What form will provide better coverage?

ANSWER: Functional building valuation allows the insurer to pay the least of the following for the repair or replacement of the building: the limit shown in the schedule; in the event of a total loss, the cost to replace the damaged building on the same site, or a different site if required by an ordinance or law, with a less costly building that is functionally equivalent to the damaged building; in the event of a partial loss, the cost to repair or replace the damaged portion of the building with less costly material, if available, in the architectural style that existed before the loss or damage occurred and the amount the insured actually spends to demolish and clear the site of undamaged parts of the building; or the amount actually spent to repair or replace the lost or damaged building with less costly material if available to demolish and clear the site of undamaged parts of the building. (As specified on the ISO Functional Building Valuation form, CP 04 38).

Agreed value is usually an optional coverage on a commercial property form that provides an amount that the insured and insurer agree the property is worth. This requires a submission of a statement of values on an annual basis. This option is often used to avoid coinsurance penalties.

The functional building valuation option may be better if the insured would want to replace his existing building with a less costly one.  
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 What's New This Week in FC&S
Volunteering and the CGL and Other Lines of Insurance Coverage

Individuals who choose to use their time for the benefit of others may be giving more than their time and effort when they choose to become volunteers.  Read More
 Litigation Watch
Occurrence and Intentional Acts

The liability insurer brought an action against the insured and telephone call recipients for a declaratory judgment that it had no duty to defend or indemnify the insured in litigation to recover for the insured placing telephone calls to play pre-recorded message to solicit business. This case is Old Dominion Insurance Company v. Stellar Concepts & Design, 189 S0.3d 293 (2016).

The underlying lawsuit arose from a previously-settled class action lawsuit wherein the plaintiffs alleged that they were the recipients of phone calls with a pre-recorded message soliciting the plaintiffs to use Stellar for their business needs. The plaintiffs alleged that the calls caused damages because there was a loss of use of their telephones due to the phones being inundated with robotic telephone solicitations. In that trial, the court ruled in favor of the plaintiffs.  
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 Fraud of the Week
Contractor Fraud – New Jersey
AMOUNT: $1.1 Million

Weeks after Hurricane Sandy terrorized the east coast, Price Home Group (PHG) became one of the original contractors approved by the state to rebuild New Jersey with their primary rebuilding program, the Reconstruction, Rehabilitation, Elevation, and Mitigation program (RREM), which is a tax-funded program.  Read More
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by  clicking here.
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FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow,, to set one up! They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer.
 Contact Us
As always, your comments and questions are welcome.

Contact us at:
FC&S Department
Phone: 800-543-0874
Fax: 859-692-2293
FC&S Team
Kelly Maheu, J.D.
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
Consulting Editor
David D. Thamann, J.D., CPCU, ARM
Managing Editor, FC&S Bulletins
  Emily Brunner
Online/Print/Production Editor
Susan L. Massmann, CPCU
Managing Editor, Electronic Publications
  Tosha Brinkman
Marketing Manager
Barry Zalma, Esq., CFE
Contributing Editor
  Donna Cozatchy
Creative Director
Hannah Smith, J.D.
Staff Writer
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