Don’t let your insurance company underpay your partial fire loss claim!

As a property owner, it is vital for you to understand the provisions of your insurance policy in order to determine if your loss is being adjusted properly and to confirm that the insurance company is paying exactly what it owes. You should also be aware of certain Florida laws which govern the manner in which payments should be made. One example of a special Florida law that impacts adjustment and payment is the law which applies if you suffer a partial fire loss.Fla. Stat. 627.702(2) (entitled “Valued Policy law”) provides, in relevant part:

Fla. Stat. 627.702(2) (entitled “Valued Policy law”) provides, in relevant part:

In the case of a partial loss by fire or lightning of any such property, the insurer’s liability, if any, under the policy shall be for the actual amount of such loss but shall not exceed the amount of insurance specified in the policy as to such property and such peril.

Florida courts have interpreted this to mean that an insurer’s liability for the “actual amount” of a partial fire loss is measured by the cost of placing the building in the same condition it was in before the loss without allowing depreciation for the materials used. Sperling v. Liberty Mut. Ins. Co., 281 So. 2d 297 (Fla. 1973).

So, in Florida, even if your Policy provides that losses are to be paid on an actual cash value basis (after subtracting depreciation), your insurance company cannot depreciate a partial fire loss claim.

Florida’s First District Court of Appeal confirmed that “FVPL [Florida’s Valued Policy Law] controls over a contradictory policy provision.” Freeman v. Am. Integrity Ins. Co. of Fla., 180 So. 3d 1203, 1209 (Fla. 1st DCA 2015).

Based on the Florida Valued Policy Law, and case law interpreting this law, if you have a partial fire loss in Florida, you are to be paid for the value of the damage (ie. “the actual amount of such loss”). The insurance company should not deduct depreciation from its payments or conditionally withhold depreciation until you prove that repairs have been made.