“You Break It, You Bought It” and Other Repair to Undamaged Property

Florida Statute § 626.9744(1) requires a Florida homeowner’s property insurance to cover repair or replacement of undamaged property when it is damaged during repair. Specifically, subsection (1) of this statute (2011) states:

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.

One could think of this as the “you break it, you bought it” statute. Additionally, Florida Statute § 626.9744(2) requires a Florida homeowner’s property insurance to cover replacement of undamaged items that do not match the repairs made to covered damage. Specifically, subsection (2) of this statute (2011) reads:

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.

This section could be applied to require an insurer to replace a peppershaker when only the saltshaker was destroyed in a fire, or to repaint an entire room when only one wall is damaged by a water leak. In a windstorm or hurricane example, it can require an insurer to replace an entire roof when it is only partly damaged if comparable roof tiles are not available.

While there are an infinite number of possible applications of this statute, there are only a few limitations. A recent federal trial court order in Ocean View Towers Ass’n, Inc. v. QBE Ins. Corp., 11-60447-CIV, 2011 WL 6754063, *9 (S.D. Fla. Dec. 22, 2011), ruled the statute only applies to Florida homeowners’ property insurance policies, not commercial policies. Additionally, the statute also states that an insurer must only make “reasonable” repairs when dealing with this undamaged property.