How Florida’s Valued Policy Law Protects Property Owners Who Suffer a Total Loss

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

When homeowners are victimized by a hurricane, fire or other catastrophic event that completely destroys their residence, the emotional, logistical and financial challenges of relocation or rebuilding can be overwhelming.  When coping with these hardships, the prospect of haggling with insurance companies in disputes over valuation of the property and other matters can feel like being kicked when you are already down.  Fortunately, our state has enacted Florida Statute §627.702, which is referred to as Florida’s Valued Policy Law.  This statute provides critical protection for homeowners who suffer a total loss to covered structures.  The statute is designed to avoid insurance company entanglements and protracted litigation by facilitating prompt settlement for property owners who experience a total loss.

Florida’s Valued Policy Law simplifies the process of proving the value of a total loss, which can significantly ease the burden for policyholders who have their home destroyed by a covered hazard.  However, there are important qualifications and limitations that homeowners need to know to obtain protection under this Florida insurance law.  There are two prerequisites for homeowners who are seeking to take full advantage of the Valued Policy Law: (1) the loss must have been caused by a peril covered under the insurance policy; and (2) the policyholder must experience a total loss of the structure.  Additionally, the statute only covers structures so personal property inside the residence and other forms of loss need to be protected by other coverage.

If property owners desire the full measure of protection under this Florida statute, it is imperative to ensure that adequate coverage is maintained.  When the two conditions above are met, the statute requires the insurance carrier to pay the full value of the claim.  This means that if the property has appreciated, it may be necessary to have the value of your home re-appraised periodically so that the coverage limit can be adjusted to account for the appreciation in value.

An example demonstrates the importance of accurate and current valuation for a property owner when seeking protection under the Valued Policy Law.  If you purchase and insure your home for $200,000, you will receive the policy limit of $200,000 if disaster strikes in the form of a covered peril that causes you to suffer a total loss.  However, the property may increase in value to $300,000 over a period of years because of rising property values in the area.  If you do not obtain a new appraisal and increase the policy limit to $300,000, you will be limited to $200,000 in insurance benefits.  When a homeowner needs to rebuild but now must cover a third of the value of the home out-of-pocket, this can create an enormous financial hardship.

The question of how often a property should be reappraised varies, but some industry experts suggest having a property reappraised on an annual basis.  While the frequency of having a property appraised ultimately is a matter of property owner discretion, the consequences of being underinsured can be significant.

You can reach Miami Property Damage Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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