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 courtroom? The Sixth District Courtroom of Attraction’s determination yesterday in Common Property & Casualty Insurance coverage Firm v. Rodriguez, 1 solutions that query clearly and, for my part, appropriately.
At its core, this case is just not 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 shedding 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, through the regular adjustment of a coated 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 not sensible 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 determination acknowledged what contract regulation has lengthy taught. As soon as a breach happens, the damages inquiry is backward-looking and hypothetical. The query is just not 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 typically argue that permitting substitute value estimates with out accomplished repairs rewrites the coverage. The courtroom appropriately turned that logic on its head. It’s the denial that rewrites the coverage, not the treatment. An insurer can not deny protection, deprive the insured of funds wanted to restore, after which use the dearth of repairs as a defend in opposition to full legal responsibility. That might reward the breaching get together and punish reliance on the contract.
This determination aligns the Sixth District with the Second and Third District Courts of Attraction and deepens the battle with the Fourth District’s determination in Qureshi. 2 That battle is just not educational. It impacts actual householders who can not entrance tens or tons of of hundreds of {dollars} to rebuild whereas combating their insurer in courtroom. It impacts public adjusters whose injury estimates are sometimes the one proof obtainable after a denial.
There’s additionally a broader lesson right here about incentives. If denial capped damages at precise money worth, insurers would have each cause to disclaim first and litigate later. By holding that substitute value damages stay obtainable after a wrongful denial, Florida courts are reinforcing the concept denial is a severe act with severe penalties.
Florida’s insurance coverage market is strained, however the reply to market stress can’t be rewriting guarantees after the actual fact. Substitute value protection means one thing. This determination helps be 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. Rodriguez, No. 6D2024-1194 (Fla. sixth DCA Feb. 2026).
2 Common Prop. & Cas. Ins. Co. v. Qureshi, 396 So.3d 564 (Fla. 4th DCA 2024).