Does Florida Require Matching?
Does Florida Require Matching?
DOES FLORIDA REQUIRE MATCHING?
Florida is one of the few states that actually has a statute on matching which attempts to give us guidelines when adjusting an insurance claim. Florida Statute Section 626.9744 is Florida’s matching statute and provides as follows:
Unless otherwise provided by the policy, when a homeowner’s insurance policy provides for the adjustment and settlement of first-party losses based on repair or replacement cost, the following requirements apply:
(1) When a loss requires repair or replacement of an item or part, any physical damage incurred in making such repair or replacement which is covered and not otherwise excluded by the policy shall be included in the loss to the extent of any applicable limits. The insured may not be required to pay for betterment required by ordinance or code except for the applicable deductible, unless specifically excluded or limited by the policy.
(2) When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas. In determining the extent of the repairs or replacement of items in adjoining areas, the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors.
(3) This section shall not be construed to make the insurer a warrantor of the repairs made pursuant to this section.
(4) Nothing in this section shall be construed to authorize or preclude enforcement of policy provisions relating to settlement disputes.
This statute must be read in conjunction with the policy. Naturally under an actual cash value policy, the insurance company may not have a duty to match and comply with the statute until the replacement cost provision of the policy is triggered. This could mean having to enter into a contract for the repairs or incur them to get reimbursed depending on the policy and your situation. However, if you have a replacement cost policy entitling you to be paid replacement cost without deduction for depreciation, the insurance company may have a duty under the statute to pay for matching in the adjustment of the claim. Not all policies are the same so it is important to read your specific policy to determine what it says. Typical Replacement Cost Language in the policy is as follows:
Buildings covered under Coverage A and B at replacement cost without deduction for depreciation, subject to the following:
- If, at the time of loss, the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of any deductible and without deduction for depreciation, but not more than the least of the following amounts:
(1) The limit of liability under this policy that applies to the building;
(2) The replacement cost of that part of the building damaged with material of like kind and quality and for like use; or
(3) The necessary amount actually spent to repair or replace the damaged building.
If the building is rebuilt at a new premises, the cost described in (2) above is limited to the cost which would have been incurred if the building had been built at the original premises.
- If, at the time of loss, the amount of insurance in this policy on the damaged building is less than 80% of the full replacement cost of the building immediately before the loss, we will pay the greater of the following amounts, but not more than the limit of liability under this policy that applies to the building:
(1) The actual cash value of the part of the building damaged, or
(2) That proportion of the cost to repair or replace, after application of any deductible and without deduction for depreciation, that part of the building damaged, which the total amount of insurance in this policy on the damaged building bears to 80% of the replacement cost of the building.
Based on the statute the standards to determine what should be matched would be the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors. The policy would require material of like kind and quality and for like use. Therefore, if you have, for example, tile that has been damaged but is no longer available and the time runs continuous throughout the home, the insurance company may be responsible for replacing the entire tile floor so that the tile matches. This may also apply to roofing, painting, stucco, wall texture, cabinets or anything else that has color or variation as well.
So far there are only two Florida decisions on matching and both hold that this statute only applies to homeowners claims. The cases are Ocean View Towers Ass’n v. QBE Ins. Corp. 2011 U.S. Dist Lexis 147579 and Strasser v. Nationwide Mut. Ins. Co. 2010 U.S. Dist. Lexis. Therefore, if you have a commercial loss, the above statue would not apply and only the policy language would control. Typically, commercial policies do not have any matching language in them so matching may not be a consideration. This would apply to both the exterior and interior for commercial property. However, it is always important to read the policy to confirm what guidelines you are operating under.
Keep in mind that matching may only be one consideration. You may also have code upgrade issues that would require replacement of undamaged portions of the policy as well. Typically, policies provide for code upgrade coverage under the Ordinance or Law Coverage section of the policy. Not all policies have ordinance or law coverage so it is important to check. The policy language for ordinance or law coverage typically provides:
You may use up to 25% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates: The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against; The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against.
You should be aware that under the provision, the insured must incur the cost unlike matching which may not have to be incurred. See Ceballo v. Citizens Property Ins. Corp., 934 So.2d 536 (Fla. 3d DCA 2006).
When determining what should be paid for a loss, you should always check your policy language. If you have a replacement cost policy, Florida Statute Section 626.9744 would apply if it is a homeowner’s claim and the insurance company would be responsible for matching the undamaged portion of the property. If you don’t have a replacement cost policy and/or your loss is a commercial loss and your policy has ordinance of law coverage, you may have coverage for replacement of undamaged property if it is required to be replaced to comply with any code upgrade requirements. If you have questions, Christopher Ligori & Associates offers free policy reviews to help you determine what options you may have.