A Zurich Insurance Group Ltd. unit has won a lawsuit against a construction company over compensation for damage to a villa caused by Hurricane Irma from 2017.
The Orchards, a housing association in Naples, Florida, had insurance with Zurich Empire Indemnity Insurance Co. when Hurricane Irma damaged 31 of its buildings, according to Tuesday's decision by the 11th U.S. Circuit Court of Appeals in Atlanta in CMR Construction and Roofing, LLC against Empire Indemnity Insurance Co.
The insurance allows the insured to choose the type of payment. It can choose to get the actual cash value, which is the replacement cost minus depreciation. it can choose the replacement cost value, which is the replacement cost without deduction for depreciation. or it may make a claim based on both the actual cash value and the compensation cost value of the notified Empire of its intention to do so within 1
However, the policy provided that Empire would not pay the compensation cost value until the property was repaired or replaced, and unless the repairs were made as soon as "reasonably possible" after the damage.
After the hurricane, Empire inspected the property and based on its estimate of the cost of repairing and deducting the deductible and depreciation in it paid The Orchards $ 96,763.53.
It does not appear from the entry "why Empire issued this payment, if it was intended to be for the real cash value, or if it was obliged to make this payment at all", they said.
After Empire issued the payment, The Orchards assigned their rights to Naples-based CMR Construction. About five months after the Empire's payment, CMR sent the insurer an estimate of the compensation cost value, which it said was $ 4 . 95 million. CMR had not completed any repairs.
Empire responded by sending CMR its own estimate "and invited questions for the expert's consideration", according to the decision.
CMR responded by suing the insurer in the U.S. District Court in Jacksonville. , Florida, which accuses the insurer of breach of contract because Empire is alleged to have underestimated the costs necessary to perform the repairs and "had failed to recognize coverage for all damages covered." The discovery revealed that CMR claimed compensation cost value and not actual cash value.
The district court granted the insurer a summary judgment rejecting the case, which was unanimously confirmed by a panel of three judges. Empire had not violated because CMR only sought compensation cost value but had not yet carried out any repairs, which according to the simple language of the policy was a requirement to obtain compensation cost value, says the Appeals Board's ruling.
"We can not write about simple terms in the insurance policy," the panel said, confirming the lower court's decision.
Lawyers did not respond to requests for comment.