I’ve run into this situation a handful of times recently in the Naples/Fort Myers area following Hurricane Irma. Generally, the policyholder is a retiree with ample spare time on his hands, a bit handy, and takes on the task of performing mostly cosmetic interior repairs himself (e.g., painting, drywall, flooring).

Amazingly, the carrier then denies payment for any labor costs, arguing that the policyholder “isn’t entitled to payment for services the insured rendered themselves.” This is an actual quote from an insurance defense attorney—with no citation to any authority, of course.

The Third District Court of Appeal opinion in Citizens Property Insurance Corporation v. Tio,1 focuses on when payment is owed to a policyholder for replacement cost value policy benefits. In its analysis, the court discusses Fla. Stat. §627.7011(3), which provides, in relevant part:

(3) In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs:

(a) For a dwelling, the insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible. The insurer shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred.

Florida law makes no distinction between labor and materials. The carrier is required by Florida law to issue payment for the actual cash value of the insured loss, whether the policyholder performs the work or not.

The Supreme Court of Florida defined actual cash value “as replacement cost minus depreciation.”2

However, labor is not depreciated in calculating actual cash value. But even if it were, since labor does not become obsolete over time, the depreciation factor would be zero.

Florida law is clear that a policyholder is entitled to the actual cash value of the insured loss – both labor and materials – even if the policyholder performs the repairs himself. The only issue remaining is the appropriate amount of depreciation withheld by the carrier in determining the actual cash value of the insured loss.
1 Citizens Prop. Ins. Corp. v. Tio, No. 3D18-2440 (Fla. 3d DCA March 18, 2020).
2 Trinidad v. Florida Peninsula Ins. Co., 121 So.3d 433 (Fla. 2013).