Second District Court of Appeal Finds Carriers Cannot Limit Damages to Actual Cost Value at the Trial Involving a Denied Claim

The carrier provided a homeowner’s policy to the insureds that provided property coverage for their home. The insureds made a claim, which the carrier denied, finding it was not covered under the provisions of the policy. The insureds filed suit, alleging a breach of contract, claiming the loss was covered and demanding damages for the full replacement cost for the property. The insureds presented estimates for both the replacement cost value and the actual cash value of the repairs. 

Prior to trial, the carrier moved to limit the damages to actual cash value of repairs, excluding evidence of replacement cost value. The carrier contended the policy provided for replacement cost. However, they argued the proper measure of damages at trial was the actual cash value because the policy precluded liability for replacement costs unless the work was actually done. Because the work was not done, the damages were limited to actual cost value. 

The insureds argued that because the policy insured on the basis of replacement costs, they were entitled to replacement costs if a breach was found, regardless of whether the repairs were performed. 

The trial court granted the carrier’s motion, finding the policy only provided for actual cost value until the repairs were completed, stating that it could not rewrite the contract. Based upon the trial court’s ruling, the insureds proffered but were not permitted to enter their damage estimates into evidence. A directed verdict was entered in favor of the carrier. 

The Second District Court of Appeal reversed, finding the policy and the statutes both made clear that the option to pay only the actual cash value initially is limited to covered claims. The court found that the carrier could not continue to deny that coverage exists for the claim and be permitted to take advantage of policy and statutory language permitting it to initially pay only the actual cash value. Relying upon Citizens Property Insurance Corp. v. Tio, 304 So. 3d 1278, 1279-80 (Fla. 3d DCA 2020), the court stated that the policy and statute govern the carrier’s post-loss obligations in adjusting and settling claims, but they do not operation as a limitation on a policyholder’s remedies for an insurer’s breach of an insurance contract. 

The court noted their analysis is supported by the foundational proposition that disputes should be resolved in a single trail, rather than piecemeal, which would be required if payment of the actual cost value was first allowed should the insureds prevailed, then a second trial on the replacement cost value after repairs are made. Thus, the court reversed and remanded the case. 

The court also certified conflict with Universal Property & Casualty Insurance Co. v. Qureshi, 396 So. 3d 564 (Fla 4th DCA 2024), which found that the insured is prohibited from introducing evidence of work that has not been performed, even where coverage has been completely denied. 

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