Third District Court of Appeal Orders New Trial for Insurer Following Admission of Incorrect Value of Damages by Insured

By Kelly M. Vogt

In Citizens Prop. Ins. Corp. v. Salazar, 2023 Fla. App. LEXIS 6891 (Fla. 3d DCA Oct. 4, 2023), the Third District Court of Appeal ordered a new trial for Citizens, finding that the trial court improperly permitted the insured to present evidence at trial on the incorrect value of damages – replacement cost value, as opposed to actual cash value.

This first party property claim involved water damages to residential real property as a result of a leaking water line. The loss settlement provision of the subject policy obligated Citizens to pay “initially . . . at least the actual cash value of the insured loss, less any applicable deductible” and then “any remaining amounts necessary to perform [covered] repairs as work [wa]s performed and expenses incurred.” This loss settlement provision mirrors the language of Fla. Stat. § 627.7011(3)(a), which provides that “[i]n the event of a loss for which a dwelling . . . is insured on the basis of replacement costs . . . the insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible,” and “shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred.”

Citizens investigated the claim and issued payment to the insured based on its actual cash value estimate of the damage less the applicable deductible. With that money, the insured allegedly performed repairs to the property but failed to produce receipts for the repairs. Thereafter, the insured hired a public adjuster who prepared a replacement cost estimate that included matching costs. Citizens declined to pay any additional amount to the insured as the insured failed to provide Citizens with any receipts to show that any actual repairs had been performed or that she had incurred any additional costs beyond their initial payment, and because the public adjuster’s estimate was excessive in price and scope. The instant breach of contract action for underpayment of insurance benefits then followed.

Prior to trial, Citizens filed a motion in limine to limit the evidence on damages to the actual cash value of the damaged property, as Citizen’s obligation to pay any additional amounts beyond the actual cash value, including matching costs, was triggered only once the insured performed the repairs and incurred expenses beyond those paid by Citizens. After the trial court denied the motion, the case proceeded to a jury trial, during which the insured relied on evidence of the replacement cost value of the damages. The jury ultimately returned a verdict in favor of the insured, and the appeal ensued.

On appeal, the Third District Court of Appeal held that the trial court erred in denying Citizen’s motion in limine to exclude the estimate that was based on replacement cost value, rather than the correct measure of damages, actual cash value. The insured had not produced any evidence to establish her damages exceeded Citizens’ initial payment, and, therefore, Citizens was not obligated to pay any additional amount or matching costs. Accordingly, the case was remanded for a new trial.