Openly’s loss settlement methodology generally depends on the coverage type, the nature of the loss, and state-specific policy guidelines. Loss settlements are typically calculated using either Replacement Cost Value (RCV) or Actual Cash Value (ACV). Settlements are evaluated using the standard relationship:
Actual Cash Value (ACV) = {Replacement Cost Value (RCV) - {Depreciation}
Coverage A & B: Dwelling and Other Structures
Settlements for Coverage A (Main Dwelling) and Coverage B (Other Structures) depend on whether the loss is partial or total.
Partial Loss Settlements
- Initial ACV Payout: Openly typically issues an initial payment based on the property’s Actual Cash Value (reconstruction cost minus depreciation).
- Holdback Depreciation Release: If repair or replacement is initiated within 180 days from the date of loss, the policyholder is generally eligible to receive the held-back depreciation once work is finalized.
Total Loss Settlements
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Non-Stated Value Policies
Payment is calculated using the replacement cost required to rebuild the dwelling back to its pre-loss condition at the time of loss. Payout is issued regardless of whether the policyholder rebuilds immediately, builds at an alternate location, or chooses not to rebuild at all. -
Stated Value Policies
Initial settlements are based on the designated stated limit displayed on the policy declarations page. Final settlement calculations depend on the chosen path forward:- No Rebuild or Alternate Location: The stated limit represents the total and final settlement amount for the dwelling.
- Same Location Rebuild: If the cost to restore the home to its pre-loss condition exceeds the stated limit, additional expenses above that limit can generally be covered under Guaranteed Replacement, up to $5 million.
For detailed state-specific rules and requirements, refer to the Stated Value Policy Guidelines*.
Coverage C: Personal Property
- Personal property losses are initially settled on an Actual Cash Value basis.
- If repair or replacement is initiated within 180 days from the loss date, holdback depreciation is typically released upon submission of repair or replacement receipts.
Note: Certain property categories may be excluded from replacement cost settlement or subject to specific sub-limits based on policy terms.
Loss Settlement Example
Example: A windstorm causes severe partial damage to a policyholder’s detached garage. The repair estimate reflects an RCV of $10,000, depreciation of $3,000, an ACV of $7,000, and a deductible of $500.
- Initial Settlement: The policyholder receives $6,500 ($7,000 ACV minus the $500 deductible) to secure materials and hire a contractor.
- Initiating Repairs: Work begins within 180 days from the date of loss.
- Submitting Proof: Upon completion, the policyholder submits final documentation.
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Holdback Release: Openly verifies completion and releases the remaining $3,000 holdback depreciation.
Proof-of-Repair Checklist
To prevent processing delays when requesting holdback depreciation funds, ensure the following documentation is submitted:
- Final Itemized Contractor Invoice: A complete breakdown showing all completed labor, materials, and final costs.
- Proof of Completion / Certificate of Satisfaction: A signed release or completion statement from the policyholder or primary contractor.
The above is meant as general information. This information does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features on this page are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to general claims handling steps, average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation.
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