In Mierzwa v. Florida Windstorm Underwriting Ass’n., 877 So.2d 774, 2004 Fla. App. LEXIS 8804 (Fla. 4th DCA 2004), the Fourth District Court held that the valued policy law (“VPL”) did not require that a covered peril be the covered peril causing a total loss, but merely a covered peril contributing to the loss. In response, the 2005 Florida Legislature amended the VPL to limit the insurer’s liability to the amount of loss caused by the covered peril(s). In this Expert Commentary, Timothy W. Volpe, managing partner of the Jacksonville law firm Volpe, Bajalia, Wickes, Rogerson & Wachs, discusses the practical implications of Florida Farm Bureau Casualty Insurance Company v. Cox, 2007 Fla. LEXIS 1678 in which the Supreme Court of Florida reversed the lower appellate court’s decision and unanimously held with the dissent filed by Judge Polston of the First District, favoring a more narrow interpretation of the VPL.

Volpe writes, “Given this result, an unwary practitioner might conclude that liability for loss is limited to that portion of the loss caused by covered perils. That is not necessarily so.” In some instances, even though a non-covered peril may have contributed to the loss, the covered peril(s) alone would still have caused the total loss. The Supreme Court limited its holding to “only those cases in which a covered peril did not cause a total loss or constructive total loss.”

Volpe suggests that careful examination of the elements of the loss, both covered and uncovered, considered with local ordinances requiring repairs which exceed fifty percent of the value of a structure to meet current building codes, may lead to a conclusion that a constructive total loss has occurred.

Volpe concludes that “the practical implications of the Cox holding are limited to those circumstances in which a covered peril does not cause a total loss or constructive total loss. Where covered perils alone cause a constructive loss, the VPL still applies to require full policy limits payment.”

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