Total Loss Does Not Mean Supplemental Coverages Get Paid—Ceballo Overruled Mierzwa So That Law and Ordinance Does Not Get Automatically Paid Following a Total Loss

We still field questions from adjusters about what gets paid if there is a total loss in Florida. I am certain that most adjusters remember something about a Florida total loss case where law and ordinance benefits were automatically paid without showing proof of loss. That case is known as Mierzwa¹ and that part of Mierzwa was overruled by Ceballo.²

Ceballo noted and held:

[S]upplemental insurance has not been considered by courts as being limited to or dependent upon the face value of the policy. See Bonito v. Cambridge Mut. Fire Ins. Co., 64 Conn.App. 487, 780 A.2d 984, 988 (2001) (replacement cost endorsement did not alter the policy limits, but provided additional coverage that could exceed the limit of liability); Marchman v. Grange Mut. Ins. Co., 232 Ga.App. 481, 500 S.E.2d 659, 660 (1998) (replacement cost rider did not increase the face value of the policy; insured not entitled to $125,000 plus $70,000); Trible v. Tower Ins. Co., 43 Wis.2d 172, 168 N.W.2d 148, 157 (1969) (stating that the VPL “applies only to the described premises and that the value of losses covered by additional insurance must be proven”). Further, “[c]ourts have almost uniformly held that an insurance company’s liability for replacement cost does not arise until the repair or replacement has been completed.” State Farm Fire & Casualty Co. v. Patrick, 647 So.2d 983 (Fla. 3d DCA 1994) (citing Leo John Jordan, What Price Rebuilding?, Brief, Fall 1990, at 17; Tamco Corp. v. Fed. Ins. Co. of N.Y., 216 F.Supp. 767 (N.D.Ill.1963)).

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…we also agree with Citizens that the VPL does not mandate the payment of the policy limits of the additional coverage without proof of loss where the unambiguous language of the policy requires such proof.

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…we disapprove of those portions of the decision in Mierzwa which conflict with this opinion.

I suggest that those interested in this topic also read, Commercial Property Insurance Policies and Triggering of Replacement Cost Value Damages.

Thought For The Day

The risk of a wrong decision is preferable to the terror of indecision.
—Maimonides
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¹ Mierzwa v. Florida Windstorm Underwriting, 877 So.2d 774 (Fla. 4th DCA 2004).
² Citizens Prop. Ins. Corp. v. Ceballo,  934 So. 2d 536 (Fla. 3d DCA 2006).