Several states have valued policy laws (“VPL”) that address situations when policyholders should be paid policy limits for total losses. I have recently had discussions with several experienced adjusters encountering unique circumstances involving Florida’s VPL. As I mentioned to them, it is amazing how you can practice for years in this area of the law and still have unique situations arise. So I thought I would write a series on Florida’s VPL.1
Florida’s VPL has existed in Florida for over a hundred years. The purpose of the statute is to fix the measure of damages in case of a total loss, or partial loss, and it requires the insurer to ascertain the insurable value at the time of writing the policy and to include the total insurable value of the property in the policy.2
Do you think Florida’s VPL applies to partial losses?
In certain circumstances, it does…the second section of the VPL addresses insurers’ obligations to pay claims when the insured property sustains a partial loss due to fire or lightning. Section (2) of Florida’s VPL provides:
(2) In the case of a partial loss by fire or lightning of any such property, the insurer’s liability, if any, under the policy shall be for the actual amount of the loss but shall not exceed the amount of insurance specified in the policy as to such property and such peril.
In cases involving a partial loss by fire or lightning, the insurer must pay “the actual amount” of the loss. The statute requires the insurer to pay the claim to place the building in as nearly the same condition as it was before the loss without allowing depreciation of the materials used.3
Florida’s VPL does not apply to partial losses other than those caused by fire or lightning. Do not hesitate to contact experienced insurance claim representatives if you have questions about whether your loss was appropriately paid.
1 Fla. Stat. §627.702.
2 Hartford Fire Ins. Co. v. Redding, 37 So. 62, 65 (Fla. 1904).
3 Sperling v. Liberty Mut. Ins. Co., 281 So.2d 297 (Fla. 1973).
