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Match Game: When Are Matching Costs Actually Due in Homeowners Insurance Claims?

Brian E. Chojnowski | March 9, 2021

Costs for matching quality, color, or size of replaced items are often a significant component in first party homeowners insurance claims. A relatively small loss can double or triple in cost when matching is factored in. Often, matching costs are included in estimates and demanded before they are owed. It is important for first party adjusters to be knowledgeable of the relevant statutes and applicable policy provisions with regard to matching costs and when they become due.

Many public adjusters and attorneys representing insureds will justify their claim for matching costs by citing Fla. Stat. § 626.9744(2), which states:


(2) When a loss requires replacement of items and the 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.
 
However, they often overlook the first sentence of Section 626.9744, which states “Unless otherwise provided by the policy, when a homeowner’s insurance policy provides for the adjustment and settlement of first-party losses based on repair or replacement cost, the following requirements apply:” The Florida Legislature clearly intended the policy of insurance to control over the statute.

Most homeowners insurance policies that pay on the basis of replacement cost contain a “Loss Settlement” provision that replicates the language of Fla. Stat. 627.7011(3)(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.
 

The “insured loss” has been interpreted as “the property that was actually damaged.” Vazquez v. Citizens Property Insurance Corporation, 304 So. 3d 1280, 1284 (Fla. 3d DCA 2020). Items that are undamaged but are replaced to match quality, color, or size are not “actually damaged.” Therefore, the insurer is not obligated to pay matching costs until the work is performed and expenses are incurred.

The insured in Vazquez submitted an estimate for repair for $84,542.93, of which approximately $70,000.00 was for matching quality, color, or size of kitchen tile and cabinets damaged by water intrusion. Citizens timely paid $33,759.52 based on its own estimate of the cost to repair the damage. The insured sued Citizens before completing any repairs and argued that the matching costs were part of actual cash value as they were reasonably necessary to complete the repairs. The trial court and the Third DCA disagreed with the insured’s position, holding that the matching costs were not for repair of property that was actually damaged. Therefore, Citizens did not owe payment for matching costs until the work was performed and expenses were incurred and no breach of the contract of insurance had occurred.

There may be scenarios where it is obvious to the insurer that matching costs will be incurred and paying such costs before they come due is reasonable. However, there may also be times where the actual damage is so small or removed from the areas where matching costs are claimed that further investigation and patience may be warranted. Some homeowners may be perfectly content with spot repairs of flooring or cabinets and would prefer to avoid the inconvenience of a widespread renovation. Less extensive repair may be more reasonable. It may behoove the insurer to request a recorded statement from the insured to determine their desires with regard to the extent of repairs or to require proof that the work was performed and costs were incurred before incurring significant costs for matching that might not ultimately be warranted.


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