I recently wrote about a Minnesota court that allows the insured to claim the replacement cost value (“RCV”) of their loss even though the property had not been repaired or replaced during bond delays. Earlier this month, the 11th Judicial Circuit for Miami Dade County offered Florida’s perspective on the subject.1
The insurer requested a summary examination of the claim for both the increased construction costs and the replacement value of the damage. The insurer argued that the policy prohibited reimbursement of these costs unless the repair or replacement of the property took place within two years of the date of the claim.
The trial court found the insurer̵7;s denial based on the two-year timeline to repair or replace the property moot.
Because there is no dispute about it [the insurer] denied [insured’s] claim directly within 90 days, this two-year repair/replacement insurance period was impossible, does not apply to the parties’ pre-trial dealings and therefore compliance was not required. Enforcing this provision before providing coverage is like putting the cart before the horse.
The court found that because the insurer denied the claim within 90 days, it rendered the insured’s obligation to notify the insurer of its intention to seek RCV benefits moot as well. The court found no provision in the insurance contract that imposed continuing obligations on the insured after a denial of coverage. Therefore, to disclaim coverage based on the insured’s post-loss obligations, the insurer would have had to first find coverage.
In addition to denying the insurer’s motion for summary judgment based on the plain language of the policy, the court found that there was an issue of fact as to whether the insurer materially breached the policy. In Florida, a material breach by one party may be considered a release from the other party’s contractual obligations.
I know my defense friends are thinking: “But what about Buckley Towers.” The court also addressed that case:
For example in Buckley Towers, the insurer did not contest the insured’s claim and interpreted the claim as a request for damages under the RCV. 395 F. App’x at 661-62. The court held that the insured was bound by the insurance contract to comply with the RCV condition to repair and replace the property, which the insured had failed to do. Id. at 663-64. The court distinguished a situation where an insurer wrongfully denies a denial of a claim (as here), recognizing that Florida law says an insurer cannot rely on noncompliance with policy terms after a claim has been denied. Id. at 664 n.1
Florida case law makes a clear distinction in the interpretation of these post-loss obligations based on whether an insurer denies coverage or accepts coverage and pays the actual cash value of the loss. This is a win for policyholders whose claims were wrongly denied. However, for policyholders who have their claims wrongly underpaid in order to seek RCV benefits, they must either cover the repair costs or get a loan while they battle with their insurer. This unfortunately places an unnecessary financial strain on policyholders who are struggling with low claims.
1 Majorca Isles I Condo. Assoc. v. American Coastal Ins. Co.No. 2021-005183-CA-1 (Fla. Cir. Ct. Feb. 9, 2023).