Replacement cost coverage was devised to remedy the shortfall in coverage which results under a property insurance policy compensating the insured for actual cash value alone. ![]() The brief succinctly describes what replacement cost coverage is designed to provide for an insured: We quote the brief of Pennsylvania Defense Institute, which was granted permission to file as amicus curiae. The type of homeowners' policies at issue provide replacement cost coverage. (3) We will pay the actual cash value of the damage, up to the policy limits, until actual repair or replacement is completed. (c) the amount actually and necessarily spent to repair or replace the damaged building. (b) the replacement cost of part of the building damaged for equivalent construction and use on the same premises or (a) the limit of liability this policy applying to the building ![]() (2) We will pay the cost of repair or replacement, without deduction for depreciation, but not exceeding the smallest of the following amounts: *220 Alex and Janet Gilderman instituted this class action on behalf of themselves and other insureds suffering a covered loss on or after January 1, 1991, under a homeowners' policy of insurance issued by State Farm Insurance Companies ("State Farm") in Pennsylvania and containing the following or similar language: We conclude that it may not and reverse the grant of summary judgment in favor of the insurer in this action. ![]() The issue presented herein is whether an insurer, which has agreed to pay repair or replacement costs less depreciation in advance of actual repair or replacement of a covered loss, may automatically withhold both depreciation and a flat twenty percent representing contractor overhead and profit from its advance payment. *219 Jonathan Wheeler, Philadelphia, for appellants. Alex GILDERMAN and Janet Gilderman, Appellants
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