Valued Policy Law – Fla. Stat. § 627.702
Florida’s Valued Policy Law (VPL) is a law meant to simplify and facilitate the prompt settling of insurance claims. The VPL has a long history in Florida law. First enacted in 1899, it initially only applied to losses caused by fire or lightning. Now, the VPL applies to losses caused by all covered perils.
The VPL is best thought of as a valuation statute. It fixes the amount of an insured’s damages to the amount of the policy. An insured therefore does not need to prove the value of the structure, and the insurer cannot challenge the value of the structure after the loss has occurred. Instead, if the VPL applies, the insured simply recovers the amount of the policy.
The VPL applies any time a covered peril causes a total loss to an insured structure, building, or mobile home. A total loss can be an actual total loss, which is when the building is so damaged that it loses its identity as a building, or a constructive total loss, which is when the building, though possibly still standing, is so damaged that ordinances or regulations prevent its repair and it must be demolished. Of course, the VPL does not apply if there is evidence of fraud or criminal fault on the part of the insured.
The VPL also does not apply to personal property located inside the structure, nor does it apply to supplemental coverage, such as ordinance and law coverage. An insured wanting to recover for these losses must prove his actual damages with his insurer pursuant to the policy.
The VPL does not apply if the total loss is caused by both a covered and a non-covered peril acting together. This poses a problem for Floridians dealing with hurricane damage, as hurricane damage often involves both covered perils, such as wind, and non-covered perils, such as floodwater.
For example, suppose an insured has a homeowner’s policy valued at $100,000. The policy covers damages caused by wind, but not damages caused by floods. A hurricane hits and renders the home a total loss. The home sustained wind damage in the amount of $40,000 and flood damage in the amount of $60,000. In this situation, the VPL does not apply, and the insured does not recover the entirety of the $100,000 policy. However, the insured still can recover the amount of damages caused by the covered peril, or $40,000.
This result changes if the covered peril would have been enough to cause the total loss on its own. For example, if the wind damage was so significant that it would have rendered the home a total loss even without the floodwater damage, the insurer cannot get past the VPL by simply arguing that a non-covered peril was also present. In that situation, the VPL does apply, and the insured can recover the entirety of the $100,000 policy.
If any provision of the insurance policy conflicts with the VPL, the VPL prevails. For example, many insurance policies have mandatory appraisal provisions to determine the amount of the loss. However, if the VPL applies, no appraisal is required. The insured recovers the value of the policy, regardless of the appraised value of the structure.
Clark Partington’s insurance team is equipped to answer questions related to your specific situation. With offices in Pensacola, Destin, Santa Rosa Beach, Tallahassee, and Orange Beach (Alabama), we are a full-service firm covering this part of the Gulf Coast. To reach one of Clark Partington’s insurance attorneys, contact Jason Peterson at (850) 436-6469 or firstname.lastname@example.org.
This publication should not be construed as legal advice. Its applicability is dependent upon specific facts and circumstances and is provided for informational purposes only. You should not act upon this information without seeking advice from a lawyer licensed in your own state.