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WILLIAM G. DITCH AND RITA C. DITCH v. YORKTOWNE MUTUAL INSURANCE COMPANY (05/31/85)

filed: May 31, 1985.

WILLIAM G. DITCH AND RITA C. DITCH
v.
YORKTOWNE MUTUAL INSURANCE COMPANY, APPELLANT



Appeal from the Judgment of the Court of Common Pleas of Elk County, No. 83-14, Civil, December 23, 1983

COUNSEL

Nevin Stetler, York, for appellant.

John R. Fernan, Ridgway, for appellees.

Del Sole, Hester and Feeney,*fn* JJ.

Author: Del Sole

[ 343 Pa. Super. Page 23]

We are asked to interpret the language contained in a policy of insurance carried on Appellee's home after the home was partially destroyed by fire on November 17, 1982. Appellees completed repairs of the damaged portions of the home at a cost of $10,915. Incidental expenses amounted to an additional $1,551.89. Appellant offered payment for the incidental expenses but disputed the amount owed for repair costs. Both parties submitted pleadings to the court and moved for summary judgment based on the lack of any issues of material fact and on the terms of the insurance policy. The court granted summary judgment in favor of the insureds, Appellees, and this appeal followed.

The dispute arose over the following insurance provision:

[ 343 Pa. Super. Page 242]

. If at the time of the loss the amount of insurance in this policy on the damaged building is less than 80% of the full replacement cost of the building prior to the loss, we will pay the larger of the following amounts, but not exceeding the limit of liability under this policy applying to the building:

     a. the actual cash value of that part of the building damaged; or

     b. that proportion of the cost to repair or replace, without deduction for depreciation, of that part of the building damaged, which the total amount of insurance in this policy on the damaged building bears to 80% of the replacement cost of the building.

The insureds, Appellees herein, carried the policy having a face value of $25,000. They argued to the trial court that "replacement cost" should be interpreted as the market value of a similar structure in the neighborhood. Attached to their pleading was a list of selling prices of similar homes in the area ranging from $14,000 to $23,000. The court approved this reasoning and granted summary judgment in favor of Appellees. Appellant argues that this interpretation of "full replacement cost" is contrary to the plain meaning of the policy of insurance and the law of Pennsylvania. "Full replacement cost", Appellant claims, should be read as the cost of rebuilding the equivalent structure on the same premises as of the date of the fire with no depreciation deduction. The cost to rebuild the home immediately prior to the date of the fire would have been $63,000. Because the value of the policy was only $25,000, Appellant argues, the home was underinsured, and eighty percent of the full replacement cost would be $50,000. Therefore, Appellant claims liability under the co-insurance provision, i.e. for 50% of the expenses incurred in ...


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