A. The Commission may approve and authorize the use of appropriate forms or provisions for supplemental contracts or extended coverage endorsements where the insured may be indemnified for (i) the difference between the actual cash value of the property at the time of loss and the cost of repair or replacement of the property on the same site with new materials of like kind and quality, within a reasonable time after the loss, and without deduction for depreciation, (ii) additional cost or loss by reason of any ordinance or law in force at the time of loss which necessitates the demolition of any portion of the insured property, (iii) any increased cost of repair or replacement by reason of any ordinance or law regulating construction or repair of the insured building, and (iv) loss from interruption of business, untenantability, or termination of leasehold interest because of damage to or destruction of the property described in the policy. These forms or provisions shall apply to coverage provided to an insured having any interest in an insured building or structure which is a part of the building described in the policy, including service equipment for the building.
B. Where any policy of insurance issued or delivered in this Commonwealth pursuant to this chapter provides for the payment of the full replacement cost of property insured thereunder, the policy shall permit the insured to assert a claim for the actual cash value of the property without prejudice to his right to thereafter assert a claim for the difference between the actual cash value and the full replacement cost unless a claim for full replacement cost has been previously resolved. Any claim for such difference must be made within six months of (i) the last date on which the insured received a payment for actual cash value or (ii) date of entry of a final order of a court of competent jurisdiction declaratory of the right of the insured to full replacement cost, whichever shall last occur.
C. Notwithstanding the provisions of § 38.2-2104, insurers may offer, as an option, coverage limited to the amount necessary to repair or replace damaged property with functionally equivalent property at a lower cost than would be required to repair or replace the damaged property with material of like kind and quality. Such policies may also permit, at the option of the insured, settlement based on the market value of the damaged property at the time of loss. No new policy of insurance covering property insured on a functional replacement cost basis shall be issued or delivered in the Commonwealth unless the following statement, printed in boldface type, is enclosed with the policy:
Important Notice
The coverage under this policy applies on a functional replacement cost basis which means that, under certain conditions, claims may be settled for less than the actual cash value of the property insured.
Code 1950, § 38-190; 1950, p. 995; 1952, c. 317, § 38.1-374; 1986, c. 562; 1992, c. 762; 1996, c. 373; 2016, c. 558.
Notes of Decisions
Cited in
7
cases (
3 in the last 5 years), 1991–2025 · leading case:
Filak v. George, 594 S.E.2d 610 (Va. 2004).
Filak v. George, 594 S.E.2d 610 (Va. 2004).
· cites it 2× “1 This policy provision is in accord with the requirements of Code §38.2-2119. 2 The plaintiffs also asserted against George claims of actual fraud and “malpractice.”
Hitt Contracting, Inc. v. Indus. Risk Insurers, 516 S.E.2d 216 (Va. 1999).
· cites it 11× “2-2105 provide for insurer liability on an actual cash value basis in the case of loss, Code § 38.2-2119 permits the *45 policy to contain an endorsement providing for the payment of the full replacement cost of property insured under the policy.”
Tiger Fibers, LLC v. Aspen Specialty Ins., 594 F. Supp. 2d 630 (E.D. Va. 2009).
· cites it 3× “Code Ann. § 38.2-2119 entitles them to the right to a declaratory judgment for the amount of recoverable depreciation.”
Whitmer v. Graphic Arts Mut. Ins., 410 S.E.2d 642 (Va. 1991).
· cites it 4× “However, as Whitmer also notes in his brief, Code § 38.2-2119 specifically allows the inclusion of replacement cost coverage.”
Riley v. Liberty Mut. Grp., Inc., 591 F. Supp. 3d 29 (E.D. Va. 2022).
· cites it 4× “Plaintiffs further allege Defendant is liable under Virginia Code § 38.2-2119 to initially pay the ACV, and, “upon replacement, restoration or repair, to pay for the difference between the [ACV] and the full replacement cost.”
Ray Hale v. State Farm Fire & Cas. Co., No. 22-2291 (4th Cir. Jan. 7, 2025).
“See Va. Code § 38.2-2119(A) (distinguishing between insurance providing coverage for “the actual cash value of the property at the time of loss” and insurance providing coverage for “the cost of repair or replacement of the property .”
Va. Code Ann. § 38.2-2119(A): 1 case
Ray Hale v. State Farm Fire & Cas. Co., No. 22-2291 (4th Cir. Jan. 7, 2025).
“See Va. Code § 38.2-2119(A) (distinguishing between insurance providing coverage for “the actual cash value of the property at the time of loss” and insurance providing coverage for “the cost of repair or replacement of the property .”
Va. Code Ann. § 38.2-2119(A)(i): 1 case
Va. Code Ann. § 38.2-2119(B): 2 cases
Hitt Contracting, Inc. v. Indus. Risk Insurers, 516 S.E.2d 216 (Va. 1999).
“2-2105 provide for insurer liability on an actual cash value basis in the case of loss, Code § 38.2-2119 permits the *45 policy to contain an endorsement providing for the payment of the full replacement cost of property insured under the policy.”
Riley v. Liberty Mut. Grp., Inc., 591 F. Supp. 3d 29 (E.D. Va. 2022).
“Plaintiffs further allege Defendant is liable under Virginia Code § 38.2-2119 to initially pay the ACV, and, “upon replacement, restoration or repair, to pay for the difference between the [ACV] and the full replacement cost.”
Va. Code Ann. § 38.2-2119(i): 1 case
Whitmer v. Graphic Arts Mut. Ins., 410 S.E.2d 642 (Va. 1991).
“However, as Whitmer also notes in his brief, Code § 38.2-2119 specifically allows the inclusion of replacement cost coverage.”
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