This post follows yesterday’s post, Glens Falls Revisited: Actual Cash Value, Matching, and the Measure of True Indemnity in Florida, promising a hypothetical proving that matching should be part of the actual cash value calculation.
Imagine this.
A proud homeowner has just completed his dream home. It is a modern architectural masterpiece perched along Florida’s Gulf Coast. The crown jewel of this residence isn’t the view, though it’s spectacular. It’s the marble. Not just any marble, but an exquisite, one-of-a-kind vein quarried from a hillside in Spain. The owner and his architect had traveled there themselves, walking the quarry, choosing the vein of matching slabs for the rare, fluid streaking and soft golden hue. They spent over a million dollars just on this spectacular exterior cladding. The marble became the home’s identity, gleaming in the Florida sunlight like a sculpture, not a structure.
On the very night the builder turned the keys over, vandals struck. Armed with tools and cruelty, they attacked the home’s right side—the front right, side elevation, and rear right—chipping, gouging, and battering the marble beyond any hope of repair. The left side of the house remained perfect, untouched, still glowing under the architectural lighting. The right side now looked like a jagged, scarred ruin.
The owner called his insurer. The adjuster came, took photos, shook his head, and said: “Yes, it’s awful. You can’t patch this. It’s going to need full replacement with new marble for both sides so they appear the same.”
But then came the twist. The insurer’s claims officer said, “We’ll only pay to replace the right side with marble that does not match. The left side wasn’t damaged. Since you are not going to repair, actual cash value means we do not have to pay to match the non-damaged marble. We talked Florida judges into this logic with our clever insurance defense lawyer arguments.”
The owner and his architect protested: “You can’t match this marble. The quarry vein is gone. It was one run, one tone. We built the house as a work of art—a single composition. If you replace only half, it will look like a checkerboard mansion!”
The insurer’s claim officer shrugged. “Florida law doesn’t require us to match. We’ll pay for what’s damaged. The rest is your problem.”
But before going, he told the insurance company’s adjuster something worth remembering:
“I built a brand-new home that matched perfectly. If you pay me less than the cost to replace it as it was with matching marble, you’re not indemnifying me. Instead, you’re leaving me half a house looking one way and the other half looking completely different. It ruins the financial value for me and any potential purchaser if it is not matched. Actual cash value can’t be calculated without first figuring out what it costs to replace what I actually had. Matching is part of that. It’s the only logical way to achieve indemnity. And since it was brand new, there should be zero depreciation. ACV and RCV are the same when the property is brand new.”
The adjuster sighed and stated:
“When I started out as an adjuster, we were taught the same thing as you just stated. If it’s new, there’s no depreciation. And we matched areas that needed to be considered for matching if they did not have a uniform appearance, like they did before the loss. That’s what made people whole. But the way some Florida insurers read the law now, matching doesn’t count. You’re not the first person to get shortchanged by that logic.”
I will debate anybody anywhere about this.
Some Florida insurers should be ashamed that they are allowing their insurance defense attorneys to argue that matching should not be included in actual cash value calculations. Just because they are winning the argument does not mean that the insurance industry should be happy that they have bamboozled some judges who may not have entirely thought through the ramifications of what everybody in the property insurance industry knows and historically has been taught how to determine actual cash value. Those companies acting in this manner are ripping off their customers, and they know it.
Now, if the policy language says that it does not pay for matching or if the debate is whether matching needs to occur because of uniform appearance disagreements, those scenarios are not what I am addressing. In those cases, matching may not be appropriate for inclusion.
Generally, to determine whether actual cash value determinations make sense, always push the logic to ask, “If the item were new and ACV and RCV are theoretically the same, is it appropriate to exclude something from consideration?”
Thoughts For The Day
“There are elements of intrinsic beauty in the simplification of a house built on the log cabin idea.”
— Gustav Stickley
“Architecture is the triumph of human imagination over materials, methods, and men, to put man into possession of his own Earth.”
— Frank Lloyd Wright
