Assignment of Claim
The Effect of Sale of a Commercial Property on a Pending Insurance Claim
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At a minimum, ACV would be the measure for any losses if repair or replacement does not take place and there is no application of proceeds to another site or to other capital expenditures. Under some policies, ACV is defined as “cost to repair or replace insured property, on the date of loss, with material of like kind and quality, with proper deduction for obsolescence and physical depreciation.” Under other policies, the definition of ACV can differ.15
Depending on the policy language, in the absence of an assignment, code upgrade costs are a possible exception to the rule that a sale does not cut off an insurance claim by the seller for incomplete repairs. In a typical policy, the code upgrade coverage section provides that such coverage is not available unless the damaged “property is repaired or replaced,” and the coverage is limited by the “actual cost incurred.” Under some policies, upon the sale of a property, the seller cannot claim recovery of what would have been the code upgrade costs if the property had not been sold and
C. Assignment of Claim
The general rule is that an insurance claim can be assigned, even if a full policy cannot. This is the rule in statutes and cases around the country, including the Gulf coast states, New York, and elsewhere.16
15 To the extent there is any uncertainty regarding the valuation, in determining ACV, New York, Florida, and other state courts follow the “broad evidence rule.” See New York Cent. Mut. Fire Ins. Co. v. Diakas, 60 So.2d 786, 788-89 (Fla. 1954); McAnarney v. Newark Fire Ins. Co., 247 N.Y. 176 (1928); Worcester Mutual Fire Ins. Co. v. Eisenberg, 147 So.2d 575, 576 (Fla. App. 1962). Under the broad evidence rule, any evidence logically tending to establish a correct estimate of the value of the damaged or destroyed property may be considered by the trier of facts to determine the "actual cash value" at the time of the loss. 147 So.2d at 576 The rule “permits any evidence which logically tends to establish a reasonable approximation of the value of the property destroyed.” Id. Courts have considered “replacement value,” “wholesale value,” and the owners´ experience and testimony to determine ACV value. Id.
16 See, e.g., Fla. Stat. § 627.455 (“a policy may be assignable, or not assignable, as provided by its terms”); Globecon Group, LLC v. Hartford Fire Ins. Co., 434 F.3d 165 (2d Cir. 2006) (policyholder could assign a claim to a successor corporation); SR International Business Ins. Co. Ltd. v. World Trade Center Properties et al., 394 F.Supp.2d 585 (S.D.N.Y. 2005) (permissible 2003 assignment of 9/11/2001 property claims from owner of World Trade Center retail leases to the Port Authority).
