RCV, ACV Policy Conditions Changes Are Coming, Texas Windstorm Insurer Says

The new law, to be applied to all new and renewal residential policies issued on or after Jan. 1, 2020, says the type of loss settlement, RCV or ACV, is determined at the time a policy is issued.

TWIA noted there can be a big difference between the replacement cost and the actual cash value of a property. Determining if insurance to value requirements are met at the time of policy issuance ensures that going into a claim, all parties are aware of whether or not their claim will be settled at replacement cost.

The law requires TWIA policies to be insured at 80% or more of the replacement cost value of the property to qualify for replacement cost coverage. Most policyholders already meet this threshold. However, sometimes a policy is insured right at the 80% threshold when it is first issued,

and over time, dips below for a variety of reasons. Unfortunately, in the past this meant after a claim, the loss was settled for the actual cash value which was a significantly lower claim payment than the replacement cost. The new law prevents this scenario from happening.

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