Replacement Cost Policy

The Florida Supreme Court recently ruled against Florida Peninsula Insurance in a case against policyholder, Amado Trinidad. Mr. Trinidad had a fire at his home, and Florida Peninsula, his insurance company refused to pay for overhead and profit when adjusting his claim. In refusing to pay for overhead and profit under a homeowner's insurance policy with "replacement cost" coverage, Florida Peninsula did not adequately cover Mr. Trinidad's loss.

Justice Pariente opined, "we hold that an insurer's required payment under a replacement cost policy includes overhead and profit, where the insured is reasonably likely to need a general contractor for the repairs, because the insured would be required to pay costs for a general contractor's overhead and profit."

In this case, the applicable statute, and insurance policy did not require the insured to actually repair the property as a condition precedent to the insurer's obligation to make payment. Therefore, the insurance company was not allowed to withhold payment until the insured repaired the home. If your insurance company attempts to underpay you for damage to your home, call Robert Sparks Attorneys for a free consultation.