Ceballo v. Citizens Property Ins. Corp.
967 So. 2d 811, 2007 Fla. LEXIS 1677, 32 Fla. L. Weekly Supp. 566 (2007)
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Rule of Law:
Florida's Valued Policy Law (VPL), which requires an insurer to pay the face value of a policy for a total loss of a structure, does not apply to supplemental insurance coverages. Recovery under supplemental provisions, such as ordinance or law coverage, is governed by the specific terms of the policy, which may require the insured to demonstrate an actual incurred loss before payment is due.
Facts:
- Juan E. Ceballo and his family (the Ceballos) owned a home insured by Citizens Property Insurance Corporation (Citizens).
- The homeowner's policy included primary coverage for the structure and a supplemental 'Ordinance or Law' coverage.
- The supplemental coverage provided for up to 25% of the primary coverage limit for increased costs the insured 'incurs' due to the enforcement of any ordinance or law during repair or reconstruction.
- A fire completely destroyed the Ceballos' home, which was declared a total loss.
- The Ceballos sought payment under the supplemental coverage without first incurring any specific costs related to ordinance or law compliance.
Procedural Posture:
- Citizens paid the Ceballos the face value of the primary policy but disputed payment under the supplemental ordinance and law coverage.
- The Ceballos sued Citizens in a Florida trial court seeking payment of the supplemental policy limits.
- The trial court entered judgment in favor of the Ceballos.
- Citizens, as the appellant, appealed the decision to the Florida Third District Court of Appeal.
- The Third District Court of Appeal reversed the trial court's decision, holding that the Ceballos must prove they incurred the covered expenses.
- The Third District certified that its decision was in direct conflict with a decision from the Fourth District, Mierzwa v. Florida Windstorm Underwriting Ass'n.
- The Ceballos, as petitioners, sought review from the Supreme Court of Florida to resolve the conflict.
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Issue:
Does Florida's Valued Policy Law (VPL) override an insurance policy's requirement that an insured must actually incur costs before recovering payment under a supplemental ordinance and law coverage provision following a total loss?
Opinions:
Majority - Anstead, J.
No. Florida's Valued Policy Law (VPL) does not override the specific language of a supplemental policy provision that requires an insured to incur a loss before payment is made. The VPL's purpose is to fix the measure of damages for the total loss of the primary insured structure by predetermining its value, thereby bringing certainty to that specific claim. This rationale does not extend to supplemental coverages, which insure against different risks, such as variable costs for ordinance compliance that may or may not be incurred. The policy's unambiguous language requires the insured to 'incur' the covered expenses to be entitled to payment. Furthermore, the VPL statute explicitly states it does not apply to coverage not stated as a specific dollar amount, and the ordinance and law coverage here is expressed as a percentage of the liability limit. To mandate payment of the supplemental coverage limits without proof of an actual loss would provide a windfall to the homeowner, contrary to the principle of indemnity.
Analysis:
This decision clarifies the scope of Florida's Valued Policy Law, establishing that its automatic, full-value payment mandate is confined to the primary dwelling coverage and does not extend to supplemental coverages. It reinforces the principle that specific policy language governs supplemental claims, even in a total loss scenario, thereby preventing insureds from recovering a windfall for contingent losses they have not actually incurred. This precedent solidifies the distinction between the agreed-upon value of a structure and the indemnification for subsequent, conditional costs, ensuring that insurance for such costs functions as reimbursement rather than a predetermined benefit.
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