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For 106 years, Florida residents and business owners used to enjoy the benefits of a substantially similar statute, known as the "valued policy law." That statute required insurance companies to pay the full amount of an insurance policy if a property is deemed a total loss.
In closing, the author advises that complaints concerning Mierzwa's interpretation of the valued policy law should be directed at the legislature, not the courts.
McKenzie, co-author of the treatise, "Louisiana Insurance Law & Practice," noted that since Louisiana's valued policy law was re-enacted in 1992, "there's been no reported decision" interpreting its language.
Because most businesses do not operate evenly from day to day throughout the year, a business that selects a valued policy form may be in danger of being underinsured or overinsured at specific times of the year.
In valued policy states, generally, insurance law requires that in case of a total loss to an insured building by a peril specified in the law, the amount stated in the policy declarations is considered the value of the structure at the time of the loss and is payable in full.
The map below identifies valued policy states and their requirements.
Editor's Note: Green states on the map below indicate those with relevant "valued policy" laws.
First, the assertion that the valued policy law was not written to apply to a policy where covered (wind) and noncovered (flood) perils combine to create a total loss is inconsistent with Florida law.
First, this argument flies in the face of the very definition of the term "valued policy." A valued policy is "one in which the value of the thing insured, and also the amount to be paid thereon in the event of loss, is settled by agreement between the parties and inserted in the policy." (7) Because the VPL fixes the amount payable when there is a total loss resulting from a covered peril, the insurer's liability is set at the inception of the policy, and the fixed portion of the loss cannot be affected, either to increase or decrease the amounts due, regardless of the actual cause(s) of the total loss.
Finding that there was no Florida case on point, the court set out "to give effect to the theories behind the valued policy law ...." (10) The court framed the issue as follows: "The purpose of the lawsuit filed in this court is to determine if the insurer is liable at all." (11) In deciding this issue, the court distinguished those cases involving dwellings that were "severely damaged" from those "totally destroyed." (12) "Persuaded by the very words of the valued policy law," the court held that "[i] f the insurer is liable, the wording of the valued policy law makes that liability for the face amount of the policy." (13)
1st DCA 1964), the principal object and purpose of Florida's valued policy law is to fix the measure of damages in case of total loss.
If these two facts exist, the valued policy law mandates that the carrier who chooses not to elect to repair (6) is liable to the owner for the face amount of the policy, no matter what other facts are involved as to the cost of repairs or replacement.