Florida courts proceed to wrestle with a deceptively easy query: What occurs to substitute value protection when an insurer denies a declare outright and forces the policyholder into court docket? The Sixth District Court docket of Enchantment’s resolution yesterday in Common Property & Casualty Insurance coverage Firm v. Rodriguez, 1 solutions that query clearly and, in my opinion, accurately.
At its core, this case isn’t actually about substitute value versus precise money worth. It’s about accountability. Common issued a substitute value coverage. A loss occurred. Common denied the declare. Solely after dropping at trial did Common argue that as a result of the householders had not accomplished repairs, their damages needs to be capped at precise money worth. That argument asks courts to faux the denial by no means occurred. The Sixth District refused to play alongside.
Florida’s substitute value statute permits insurers, in the course of the regular adjustment of a lined declare, to pay precise money worth first and maintain again depreciation till repairs are carried out. That statutory framework is smart when the insurer is honoring the contract. It is unnecessary when the insurer has denied protection altogether. The statute governs claims dealing with. It doesn’t function as a damages-limiting escape hatch after a breach of contract has been confirmed.
This resolution acknowledged what contract legislation has lengthy taught. As soon as a breach happens, the damages inquiry is backward-looking and hypothetical. The query isn’t what the insurer paid, and even what the insured managed to do after the denial. The query is what the insurer would have owed had it carried out as promised. In a substitute value coverage, that reply essentially consists of substitute value.
Insurers usually argue that permitting substitute value estimates with out accomplished repairs rewrites the coverage. The court docket accurately turned that logic on its head. It’s the denial that rewrites the coverage, not the treatment. An insurer can’t deny protection, deprive the insured of funds wanted to restore, after which use the dearth of repairs as a protect in opposition to full legal responsibility. That will reward the breaching social gathering and punish reliance on the contract.
This resolution aligns the Sixth District with the Second and Third District Courts of Enchantment and deepens the battle with the Fourth District’s resolution in Qureshi. 2 That battle isn’t tutorial. It impacts actual householders who can’t entrance tens or a whole lot of hundreds of {dollars} to rebuild whereas preventing their insurer in court docket. It impacts public adjusters whose injury estimates are sometimes the one proof out there after a denial.
There may be additionally a broader lesson right here about incentives. If denial capped damages at precise money worth, insurers would have each motive to disclaim first and litigate later. By holding that substitute value damages stay out there after a wrongful denial, Florida courts are reinforcing the concept denial is a critical act with critical penalties.
Florida’s insurance coverage market is strained, however the reply to market stress can’t be rewriting guarantees after the very fact. Substitute value protection means one thing. This resolution helps make sure that it nonetheless does.
Thought For The Day
“Florida is a spot the place the soul is fed by sunshine.”
— Jimmy Buffett
1 Common Prop. & Cas. Ins. Co. v. RodriguezNo. 6D2024-1194 (Fla. sixth DCA Feb. 2026).
2 Common Prop. & Cas. Ins. Co. v. Qureshi396 So.3d 564 (Fla. 4th DCA 2024).
