Quarterly Newsletter Winter 2017
Insurers and policyholders are often faced with a situation of whether depreciation may be recovered when the insured sustains a covered loss but does not use “new construction materials” to rebuild their house. In a recent opinion, a Washington Court rejected an insurer’s position that the term “new,” in the replacement cost clause of a Homeowners Policy (“Policy”) required the insurer to only repay the withheld depreciation if the insureds built or purchased a new home. However, the Court also held that, despite being incorrect on the scope of coverage, the insurer could not be held liable for bad faith, or violation of the Consumer Protection Act (“CPA”) and Insurance Fair Conduct Act (“IFCA”).