You are the victim of a South Florida hurricane. Despite your preparations, half your entrance way is destroyed, while the other half remains untouched. Unfortunately, the porcelain tiles you hand-selected from your local design warehouse are no longer available. Does your insurer have an obligation to replace the entire floor with matching tiles, or only the portion that sustained damage? The answer may depend on whether your home or business incurred the loss, the language of your insurance policy, and whether the damaged and undamaged property form a continuous run or are otherwise adjoined.
The Florida Legislature has addressed this issue: Section 626.9744 of the Florida Statutes requires insurers to “make reasonable repairs or replacement of items in adjoining areas” if a loss to residential property requires replacement of itemas and the replaced items do not match in quality, color, or size. Section 626.9744’s “matching” requirement, however, has been confined to homeowner’s policies and deemed inapplicable to commercial residential insurance contracts. See Strasser v. Nationwide Mut. Ins. Co., No. 09-60314-CIV, 2010 WL 667945, at *1 (S.D. Fla. Feb. 22, 2010). In the commercial property context, an insurer’s obligation to replace both damaged and undamaged property to achieve aesthetic uniformity is driven principally by the policy language at issue.
When the issue of matching arises in the commercial property context, the insurer and insured advance two recurring positions. Insurers argue that coverage is available only for “direct physical loss,” and the insurer has no liability to replace property that did not sustain a direct physical loss, regardless of a resulting lack of uniformity. Conversely, insureds argue that their property should be fully restored to the same condition it was in prior to the loss. Where, as is often the case, a policy grants an insurer the right to choose between paying the actual cost of repair, or the cost to replace the damaged property with that of “like kind and quality,” some Florida courts have held that the insurer has no affirmative obligation to replace undamaged property to match damaged property, even where like materials are unavailable. For example, in Strasser, the policy provided the insurer with several payment options, including the option to (a) pay the value of damaged property, or (b) repair, rebuild or replace the property with property of like kind and quality. Id. at *4. The court noted that option (b), if elected, required the insurer to match the damaged property with that “of like kind and quality.” Id. Under option (a), however, the insurer was required to pay only the value of the damaged property, without regard to whether “matching” materials were available. See also Ocean View Towers Ass’n v. QBE Ins. Corp., No. 11-60447-CIV, 2011 WL 6754063, at *10 (S.D. Fla. Dec. 22, 2011) (same).
Recently, however, the United States District Court for the Southern District of Florida held that even where a policy does not expressly provide for “matching,” the need for aesthetic uniformity may warrant implied coverage for matching to the extent the damaged and undamaged property form a “continuous run.” See Great Am. Ins. Co. of New York v. Towers of Quayside No. 4 Condo. Ass’n, No. 15-CV-20056, 2015 WL 6773870, at *3 (S.D. Fla. Nov. 5, 2015). In Towers of Quayside, the court held that, despite the absence of policy language requiring “matching,” the insurer may nonetheless be required to match the wallpaper, baseboards, woodwork and carpeting on damaged floors of a condominium where the materials “form a continuous run from one end of the building to another.” Id. The court, however, distinguished instances where the materials are separated by, for example, a central elevator lobby and therefore did not form a “continuous run.” Id. at *3 n.5. Notably, the court did not consider the potential impact of local codes and ordinances, which may require aesthetic uniformity, and their interplay with an insurance policy’s code and ordinance coverage.
In sum, homeowners faced with a “matching” issue have the benefit of Section 626.9744. Case law interpreting the statute is sparse, however, and homeowners should carefully review their policies to ensure they have secured the appropriate coverage. Similarly, commercial property owners — particularly those with older properties or hard-to-find fixtures, flooring, roofing, or the like — should review their coverage to ensure their investment’s continued aesthetic uniformity. Whether damaged and undamaged property is “adjoining” or constitutes a “continuous run” is a fact-intensive inquiry that has unfortunately received little attention from Florida courts, leaving both insureds and insurers uncertain of their contractual rights and obligations.
By Christopher T. Kuleba
and Camilla J. Cohen
Ver Ploeg & Lumpkin, P.A.
100 SE Second St., 30th Floor
Miami, FL 33131
South Florida Legal Guide 2016 Edition