Though the Florida legislature had good intentions when it passed Florida Statute § 626.9744 governing claim settlement practices relating to property insurance, the language in the statute has been interpreted to require insurers to replace flooring throughout an entire house as long as the homeowner claims that the damaged section of the flooring cannot be matched and that the same type of flooring runs continuously throughout the house. This is true no matter the age of the flooring or the size of the continuous flooring.
Specifically, paragraph 2 of Section 626.9744 provides that, unless otherwise provided by the policy:
When a loss requires replacement of items and replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas. In determining the extent of the repairs or replacement of items in adjoining areas, the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors.
In recent years, insurers in Florida have seen an increase in claims involving dropped objects, such as a skillet dropped in the kitchen or a metal figurine dropped in the living room, which caused damage to one tile. In these claims, the insurer is asked to replace the flooring throughout the house. Insureds make the following arguments to support their dropped object claims: they have no remaining matching tiles; they have searched high and low for matching tiles, to no avail; or they cannot agree to let the insurer harvest a tile from a hidden area of the floor, such as underneath a kitchen cabinet, because the hidden area of the floor might no longer be hidden if they decide to remodel in the future.
As much as insurers may want to fight these dropped objects claims, it often does not make economic sense to do so because of the anticipated costs of litigation. At least one insurer (Florida Peninsula Insurance Company) refused to pay this type of claim, as chronicled in the case of Raul Maestri v. Florida Peninsula Insurance Company (Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, 2008). The insurer had long been denying these tile damage claims under an exclusion for “marring,” but usually settled the claims or participated in appraisal. In Maestri, after fully investigating the claim, including having an engineer inspect the damage, the insurer denied the claim as “marring” pursuant to the “wear and tear, marring, deterioration” exception to coverage under the policy. The insurer argued that the “wear and tear, marring, deterioration” provision applied to the insured property as a whole, not just to individual components of the property. The insurer asserted that damage resulting from objects dropped when people in daily life at home carry items from one room to another or perform maintenance work is part of the wear and tear of the home.
The insurer also argued this type of claim also begs the question: Is an insurance company obligated to re-tile an entire house every time something heavy is dropped on one or a few tiles? As the insurer noted, that cannot be what was expected under the policy or intended by the parties when they entered into the insurance contract. The judge agreed and ruled that the insurance policy was not intended to cover the claimed loss. The insured did not appeal the trial court’s ruling of no coverage and, thus, there is no Florida appellate court opinion.
In January of 2012, Citizens Property Insurance Corp., the state’s insurer of last resort and also the state’s largest property insurer for business and homeowners, was allowed to modify its policies to have a $10,000 cap for cosmetic or aesthetic damage to flooring including, but not limited to, chips, scratches, dents, marring or any other damage that covers less than 5% of the total floor surface area of the building and does not prevent typical use of the floor. In this way, an unintended consequence of the statute is being addressed.
Insurers doing business in Florida are expected to follow in Citizens’ footsteps to reduce exposure to excessive loss payments for undamaged continuous flooring under Florida Statute § 626.9744.