Many homeowners’ property insurance policies are replacement cost value policies for the dwelling, oftentimes referred to as Coverage A.  A replacement cost policy is defined as follows:

Replacement cost insurance is designed to cover the difference between what property is actually worth and what it would cost to rebuild or repair that property.”  A “replacement cost policy” is a policy where the insurer agrees to compensate for a loss without taking into account depreciation. Such a policy does not prohibit repairing the damaged property.  In fact, both the governing statute as well as the parties’ insurance policy expressly provide that an insurer may limit its liability to the “reasonable and necessary cost to repair the damaged, destroyed, or stolen covered property.”  Thus, we conclude that a replacement cost policy does not mandate that the insurer replace the damaged property.

Prepared Ins. Co. v. Cal, 209 So.3d 14, 17 (Fla. 4th DCA 2020) (internal citations omitted).

Florida Statute s. 627.7011 governs an insurer’s post-loss obligations under a homeowner’s property insurance policy and provides in applicable part:

(3) In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs:

(a) For a dwelling, the insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible. The insurer shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred. If a total loss of a dwelling occurs, the insurer shall pay the replacement cost coverage without reservation or holdback of any depreciation in value….

Per this statutory language, under a replacement cost policy “the insurer is required initially to pay to its insured at least the actual cash value of the covered loss, less the deductible. After it meets this statutory obligation, the insurer is required to pay its insured for repairs as the insured incurs repair costs, also known as the replacement cost value.”  Citizens Property Ins. Corp v. Tio, 45 Fla. L. Weekly D641d (Fla. 3d DCA 2020) (finding that when insurer denies coverage and forces the insured to sue, the insurer cannot try to cure the breach of denial by subsequently tendering only the actual cost value).

If you have a property insurance dispute with your carrier, it is important to work with counsel to ensure your rights are being preserved under your policy.

Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.