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Know Your Rights
The 2009 Florida Statutes Title XXXVII INSURANCE Chapter 626 INSURANCE FIELD REPRESENTATIVES AND OPERATIONS View Entire Chapter 626.9744 Claim settlement practices relating to property insurance.--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. History.--s. 10, ch. 2004-370; s. 155, ch. 2004-390. Residential Claim - Actual Cash Value Settlement When there is damage to the insured’s home or structure, the company should pay to repair or replace the covered damages. Depending on the type of policy the insured has, claims may be settled on an Actual Cash Value (ACV) basis. Actual Cash Value means the cost to replace an item, less depreciation . All claim payments are subject to the deductible Residential Claim - Claim Settlement Practices These apply to the adjustment and settlement of first party claims relating to property insurance. 1. When a loss requires repair or replacement of an item or part, any physical damage incurred in making the repair or replacement, which is covered and not excluded by the contract, shall be included in the loss to the extent of applicable limits. The insured may not be required to pay for betterment required by ordinance or code except for the 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 company should make reasonable repairs or replace the items in adjoining areas. The company may take into consideration such things as the cost of repairing or replacing the items in the adjoining areas, the degree of uniformity that can be achieved without the cost, the remaining useful life of the undamaged portion, and other relevant factors. Reference: Florida Statute 626.9744 Residential Claim - Valued Policy Law In the event of the total loss of any building, structure, or mobile home, the insurer’s liability under the policy for the loss is the face amount of the policy, if such loss was caused by a covered peril . Reference: Florida Statute 627.702 Residential Claim - Mortgage Company on Check Insurance companies generally issue joint claim payment checks for the structure to the insured and the mortgage company because the home serves as collateral for the loan. The mortgage company's interest is usually shown on your policy and the provisions of the policy are intended to protect the mortgage company's interest from loss of value due to disaster damage. A licensed insurer must issue a claim check to the primary policyholder, payable only to the primary policyholder for personal property, contents, and additional living expenses, which are not subject to a recorded security interest. Residential Claim - Personal Property Excluded Examples of personal property that may not be covered on a homeowners policy are: Personal property covered under a separate policy; Animals, birds, or fish Motorized land vehicles except those used to service an Insured’s residence which are not licensed for road use; Any device or instrument, including any accessories or antennas, for the transmitting, recording, receiving, or reproduction of sound which is operated by power from the electrical system of a motor vehicle, or any tape, wire, record, disc, or other medium for use with any such device or instrument while any of this property is in or upon a motor vehicle. Aircraft and parts. Property of roomers, boarders and other tenants, except property of roomers and boarders related to any insured; Property contained in an apartment regularly rented or held for rental to others by any insured; Property rented or held for rental to others away from the residence premises; Business property in storage or held as a sample or for sale or delivery after sale; Business property pertaining to a business actually conducted on the residence premises; Business property away from the residence premises. Since most policy forms are different, it is important to check the policy for a list of the personal property exclusions. Residential Claim - Replacement Cost Settlement (Up Front) Replacement Cost means the actual cost to replace the insured property, without a reduction for depreciation . Effective October 1, 2005, Florida Statute 627.7011 indicates that any new or renewal personal lines residential policy , which contains replacement cost coverage , must state that full replacement cost is paid for the dwelling and personal contents without a deduction for depreciation. In other words, there will no longer be a ‘holdback’ of any funds until repairs are made or property is replaced. After October 1, 2005, an insured must sign an approved form if they do not want replacement coverage on their policy. If a form is not signed, it is deemed by statute that the insured’s policy contains full replacement cost coverage. Residential Claim - Timeframe for Resolution Effective July 1, 2008, it is considered an unfair trade practice if the insurer fails to pay undisputed amounts of partial or full benefits owed under first-party residential property insurance policies within 90 days after determining the amount and agreeing to coverage, unless payment of the undisputed amount is prevented by an act of God, prevented by the impossibility of performance, or due to actions by the insured or claimant that constitute fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which benefits are owed. Prior to July 1, 2008, a timeframe was not specified by law Reference: Florida Statutes 626.9541 Residential Claim - Valued Policy Law In the event of the total loss of any building, structure, or mobile home, the insurer’s liability under the policy for the loss is the face amount of the policy, if such loss was caused by a covered peril . Reference: Florida Statute 627.702 Residential Claim - Overinsured Personal Property, Refund of Unearned Premium If there is a total loss of personal property and the amount of the appraised or agreed amount to replace is less than the amount insured, the insurance company must return the unearned premium for the excess amount of insurance on the property. (Example, an insured has a diamond ring insured for $10,000. The ring was stolen and the insurance company replaced the ring for $6,000. The company must refund the premium collected for the remaining $4,000 of coverage.) Reference: Florida Statute 627.705 Residential Claim - Sinkhole Investigation Florida law requires insurance companies, upon receipt of a claim for loss due to a sinkhole, to inspect the premises to determine if there has been physical damage to the structure which might be the result of sinkhole activity. If the insurer discovers damage which is consistent with sinkhole activity, or if the structure is located close to a structure in which sinkhole damage has been verified, then prior to denying a claim, the insurer must obtain written certification from a qualified source. eliminating the cause of the damage as sinkhole related within a reasonable professional probability. Reference: Florida Statute 627.707 Residential Claim - Loss Assessment In some cases an assessment is charged to a homeowner as a result of direct loss to property that is shared by all members of an association. However, the loss assessment can also occur due to bodily injury or property damage of another caused by the association (negligence ). In this case, the loss assessment would be covered under the insured's liability coverage , Coverage E. When an assessment is charged to a homeowner, the date of loss is the date on the bill issued by the association. You should file the claim with the company you were insured with on the date of the bill. Please Note: Most policies have a specified limit of coverage for loss assessment and a deductible that will apply. Because policies are different, the insured should always refer to their own policy provisions for the limitation and deductible information. Also, it is very common for a unit owners’ policy to exclude coverage for the master condo associations’ policy deductible. Residential Claim - Mierzwa Case (wind vs. water) The Florida Supreme Court overturned the Mierzwa case 09/20/07. The ruling issued by the Court involved a claim by an insured which had their home totaled by Hurricane Ivan. The case was on appeal from the lower Courts. Most of us remember the Mierzwa case came from the lower Courts where they ruled that under the Valued Policy Law (627.702) if the home was a total loss, and a portion of the cause of the loss was due to a covered peril, then the entire amount would be owed by the insurer, even if the remainder of the damage was caused by a peril not covered in the policy. This is the Mierzwa. Most of the damage was caused by wind (a covered peril) the insurer owed the full loss. On 09/20/07, the Florida Supreme Court overturned the lower Courts and in a nutshell said the insurer only owes for the portion of the loss caused by a covered peril. Since this, the Florida Legislature revised the Valued Policy Law to specify the loss must be caused by a covered peril. See Valued Policy Law