Congratulations to Universal Property & Casualty Insurance Company and Salmon & Salmon Attorney Annie S. Antos on a summary judgment! The victory protected Universal from indemnity exposure over $230,000 on a windstorm loss in Pasco County, Florida. The successful defense was based, once again, on the proper measure of damages!
During the adjustment of the loss, Universal determined the insureds’ damages amounted to $677.43 actual cash value (ACV), while their public adjuster submitted a replacement cost value (RCV) estimate exceeding $230,000.00.
The plaintiffs filed a Motion for Summary Judgment, asserting they were entitled to replacement cost damages. In response, Ms. Antos argued that the policy’s Loss Settlement Provision 2.d., states that the insurer will initially pay at least the actual cash value of the insured loss, less any applicable deductible and will pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred. This policy language mirrors Florida Statute 627.7011(3)(a) which limits the insurer’s initial liability to actual cash value.
Plaintiffs admitted in their interrogatory answers and deposition that no repairs had been performed to the subject property. The clear language of the policy and Florida Statute establishes that actual cash value is the proper measure of damages when repairs have not been performed, so Plaintiffs could not prove Universal failed to fulfill our duties under Section 2.d. of the Loss Settlement provision.
Judge Alicia Polk of The Sixth Circuit entered summary judgment in Universal’s favor. The Court agreed that the policy and the Florida Statute clearly and unambiguously state that an insurer is not required to pay more than actual cash value until work is performed and expenses are incurred.
In turning to Plaintiffs’ argument that they were entitled to replacement cost damages, recovery under Section 2.a. is only available when repairs are performed. Even if the Court found that Plaintiffs were entitled to recovery under 2.a., Plaintiffs could not prove the damages exceed zero. Section 2.a. allows the Plaintiffs to recover the lesser of three amounts: (1) the policy limit for dwelling coverage; (2) the replacement cost of the damaged building with material of like kind and quality; or (3) the amount actually spent to repair or replace of the damaged building. Because the Plaintiffs had not performed any repairs or incurred any expenses, the policy language made the value of (3) zero.
The Loss Settlement provision continues to provide a winning formula for the thought leaders in the defense industry and their insurance clients!