Insurer not required to pay replacement cost where property not replaced
Hartford insured Vakas' medical office when it was destroyed in a fire. The policy provided for replacement cost coverage up to $240,000; but only if the property was replaced. Otherwise, it provided for actual cash value of the destroyed property. In this case, only 4 items were replaced, as Dr. Vakas had been dead several years by the time of the fire. But, the claimants (Dr. Vakas' heirs) still wanted Hartford to pay the replacement cost for the destroyed office contents.
The court notes that Kansas law applied and follows the general rules regarding construing ambiguous policies against insurance companies. The court found that the policy is not ambiguous or internally inconsistent. After reading the policy, “a reasonably prudent insured would understand that Hartford would not pay replacement-cost value unless and until the property actually was replaced.”
Thus, summary judgment was affirmed.
See, Vakas v. Hartford
