After nearly two decades of practice in Florida’s first party property insurance arena, I believe some of the most underutilized defenses these cases are those directed to the “ACV/RCV” distinction.  “ACV” stands for “Actual Cash Value”, where “RCV” stands for “Replacement Cost Value”.

It has long been stated in Florida that “[r]eplacement cost insurance is designed to cover the difference between what property is actually worth (in its post-loss, damaged state) and what it would cost to rebuild or repair that property.” Trinidad v. Fla. Peninsula Ins. Co., 121 So. 3d 433, 439 (Fla. 2013) (citations omitted).  In the property insurance context, benefits paid on a replacement cost basis are “‘measured by what it would cost to replace the damaged structure on the same premises.’”  Id.  On the other hand, actual cash value, in its simplest form is replacement cost less depreciation, which is a “decline in an asset’s value because of use, wear, obsolescence, or age.” Id. (quoting Black’s Law Dictionary 506, 1690 (9th ed. 2009).

However, these definitions have evolved over the years. For instance, Florida has a “matching statute”.  “Matching costs” are those incurred in replacing undamaged portions of the property to achieve aesthetic continuity with areas of repaired damage. Issues related to matching costs commonly arise in roof and flooring losses where the particular damaged roof or floor tile is no longer available and the insured claims it is therefore necessary to replace the entire roof or continuous flooring surface. Under Florida Statutes § 627.9744, the “matching statute”, where an insurance policy provides for adjustment and settlement based upon a replacement cost basis, and the “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.” As the Third District Court of Appeal recognized in Vazquez v. Citizens Property Insurance Corporation, however, the plain language of the matching statute defers to the insurance policy.  304 So. 3d 1280, 1285 (Fla. 3d DCA 2020). Indeed, Florida Statutes § 627.9744 leads with the phrase “Unless otherwise provided by the policy…”. As a result, Vazquez holds that matching costs are not part of part of the actual cash value of covered damage to the insured’s property. Vazquez v. Citizens Prop. Ins. Corp., 304 So. 3d at 1285.

So, why do these terms “ACV” and “RCV” matter and how do they apply to the measure of damages an insurer is obligated to pay on any particular covered loss? Florida Statutes § 627.7011 reads, in pertinent 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…  If a total loss of a dwelling occurs, the insurer must pay the replacement cost coverage without reservation or holdback of any depreciation in value, pursuant to s. 627.702.

(Emphasis added.) Similarly, many insurance policies carry a loss settlement provision that contemplates payment on an RCV basis, but only require the insurer to pay the ACV of a covered direct physical loss at the outset until the insured performs repairs. Typical loss settlement provision language to this effect may read:

Loss Settlement.  Covered property losses are settled as follows:

(d) We will initially pay at least actual cash value of the insured loss, less any applicable deductible.

We will then pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred, subject to 2.a. and 2.b. above.

As one can see, this example policy language dovetails with the requirement under § 627.7011(3)(a) that the insured perform repairs and incur repair expenses before the insurer owes replacement cost.  Indeed, a litany of Florida decisions support the notion that the carrier is not obligated to pay the RCV of the covered direct physical loss until the insured completes repairs. See Vazquez v. Citizens Prop. Ins. Corp., 304 So. 3d 1280; Florida Insurance Guaranty Association v. Somerset Homeowners Association, Inc., 83 So. 3d 850 (Fla. 4th DCA 2011) (concurring with the Eleventh Circuit’s decision on Florida law’s requirement that repairs be performed before entitlement to replacement cost); see also Ceballo v. Citizens Prop. Ins. Corp., 967 So. 2d 811, 815 (Fla. 2007) (explaining that with contracts, replacement cost damages do not arise unless the repairs or replacement have been completed); State Farm Fire & Cas. Co. v. Patrick, 647 So. 2d 983, 984 (Fla. 3d DCA 1994) (holding that the trial court erred by ignoring the plain language of the replacement cost policy issued to the insured).

But what if the insurance carrier denies payment for the claim and the insured files suit?  Can the carrier assert an affirmative defense stating it is only obligated to pay damages on an ACV basis where repairs have not been completed?  There is presently a conflict certified on this issue between the Third and Fourth District Courts of Appeal. Citizens Property Insurance Corporation v. Tio, 304 So. 3d 1278 (Fla. 3d DCA 2020) involved a 2015 water damage loss alleged to have occurred due to a collapsed drain line.  Citizens would deny coverage for the loss as excluded on the grounds it was caused by constant water leakage over time, but then conceded coverage once the case was in suit. Id. at 1279. Citizens argued entitlement to the ACV defense as a limitation on damages pursuant to the policy’s loss settlement provision and Florida Statutes § 627.7011(3). Id. The Tio court held that Citizens could not “wrongfully deny coverage” for the claim, cause the insured to file suit, and then seek to enforce the policy at its convenience in limiting the damages to ACV. Id. at 80.  The court reasoned that § 627.7011(3) “governs an insurer’s post-loss obligations” in adjusting and settling a claim but does not operate as a limitation on the insured’s remedies for breach of an insurance contract. Id.

In Universal Property & Casualty Insurance Company v. Qureshi, 396 So. 3d 564 (Fla. 4th DCA 2024), the carrier paid only the $10,000.00 policy limit for mold without paying for any of the damage caused by the water leak that resulted in mold. The insureds never repaired items in their estimate prior to selling the property. Id. at 565. Universal moved in limine before trial to preclude any evidence of repairs not performed before the sale of the house. Id. at 565. The trial court denied this motion and allowed the insured to present evidence of the estimated cost for damages caused by the loss despite the lack of repairs performed or expenses incurred. Id. at 566. The Fourth District Court of Appeal disagreed and rejected the dissent’s reliance on Tio and a Nebraska Supreme Court decision, D&S Realty, Inc. v. Markel Insurance Company, 816 N.W. 2d 1 (2012). Id. The Qureshi court noted the longstanding principal that “while an insurer may be estopped by its conduct from seeking a forfeiture of a policy, the insurer’s coverage or restrictions on the coverage cannot be extended by waiver or estoppel.” Qureshi, 396 So. 3d at 567 (quoting Doe on behalf of Doe v. Allstate Ins. Co., 653 So. 2d 371 (Fla. 1995)). In other words, insurance coverage cannot be “created” by waiver or estoppel, which is what the Fourth District felt it would be endorsing if it foreclosed an insurer from applying the loss settlement provision to preclude RCV damages due to lack of repairs, even where the insurer denied payment of the claim. Id. at 568.  The Qureshi court reversed and remanded for a new trial on damages because “the trial court impermissibly allowed the jury to consider evidence of estimated but not yet incurred repair costs in determining recoverable damages”, and certified “conflict with the Third District’s contrary decision in Tio.” Id.

Despite Qureshi’s relative recency, subsequent decisions have also chimed in on the ACV/RCV issue. In Homeowner’s Choice Property & Casualty Insurance Company, Inc. v. Clark, arising out of a claim of hurricane damage to a rental property, the carrier made payment for the actual cash value of the loss.  2025 WL 850677 (Fla. 1st DCA 2025).  After payment, the insureds’ public adjuster submitted a dwelling estimate of $440,093.90 using the same figures for ACV and RCV, a personal property estimate with attached inventory for $57,684.00 that likewise did not distinguish between ACV and RCV, and a $43,479.23 estimate for fair rental value. Id. The insureds never performed mitigation services to stem any mold growth, nor did they do any work other than some roof and siding repairs. Id. At trial, the carrier moved for directed verdict on the ground that the insureds failed to provide evidence that they actually incurred a greater loss than indicated and paid by the carrier. Id. On appeal, the First District followed Qureshi and Citizens Property Insurance Corporation v. Salazar, 388 So. 3d 115 (Fla. 3d DCA 2023) (“RCV estimate” should not have been allowed and directed verdict should be granted for insurer where insured failed to produce any evidence that insurer did not pay sufficient ACV) in holding:

[W]e too conclude that when (1) an insured’s estimate and evidence provides only for RCV costs and (2) no evidence is presented to challenge an insurer’s ACV payout, no breach of contract occurs when the insurer fails to pay money under the insured’s estimate.

Id. at *10. Here, Clark takes the “ACV/RCV” analysis a step further in ruling that, as a matter of law, no breach had occurred where the carrier paid the ACV and the insureds failed to submit an estimate or other evidence showing that ACV payment was insufficient.  Id. The Northern District of Florida likewise followed Clark and Qureshi, in Monterrey’s Grill, Inc. d/b/a Rio Bravo Bayou, LLC v. Axis Surplus Insurance Company, 2025 WL 1378574 (N.D. Fla. 2025). This federal court, bound to apply Florida substantive law, granted final summary judgment for the insurer on several grounds. Id. Importantly, it held the insured could not establish a breach of the policy where the insured’s only estimate, submitted with a sworn proof of loss, was an RCV estimate  and the insured had not yet shown entitlement to damages beyond ACV, as the minor repairs performed were below deductible and none of the repairs on the RCV estimate had been completed. Id.

As a matter of practice, therefore, in addition to motion in limine seeking to limit the insured’s damages to ACV, the carrier should also evaluate the insured’s repair estimate(s). If based solely on an ACV calculation or where no distinction is drawn between ACV/RCV repair costs (i.e. the ACV and RCV amounts are the same), a motion to strike the insured’s estimate(s) would also be appropriate. See Clark, 2025 WL 850677 at *10 (quoting Salazar, 388 So. 3d at 118). If granted, summary judgment or directed verdict should likely follow, due to a lack of breach and/or evidence of damages. Id. It is important to remember that “[a] cause of action must exist and be complete before an action can be commenced or, as sometimes stated, the existence or non-existence of a cause of action is commonly dependent upon the state of facts existing when the action was begun.” Orlando Sports v. Sentinel Star, 316 So. 2d 607, 610 (Fla. 4th DCA 1975). Therefore, any estimates the plaintiff submits during litigation that the insured did not submit to the carrier pre-suit would not be evidence of a “breach” by the carrier for non-payment of any such estimate. It is also important to note that many of these cases also analyze the insured’s compliance, or lack thereof, with policy conditions in determining whether the insured has established a right to claim RCV damages. See Clark, 2025 WL 850677; Monterrey’s Grill, Inc., 2025 WL 1378574.

The distinction between Actual Cash Value (ACV) and Replacement Cost Value (RCV) remains a critical yet underutilized defense in first-party property insurance litigation. By leveraging the requirements of Florida Statutes § 627.7011(3) and policy loss settlement provisions, insurers can limit their liability to ACV when repairs are not completed, as supported by cases like Qureshi, Clark, and Monterrey’s Grill. The certified conflict between Tio and Qureshi highlights an evolving judicial landscape, but recent decisions favor insurers enforcing ACV limits when insureds fail to provide distinct ACV estimates or complete repairs. In certain cases, this can even lead to a complete bar to recovery. Insurers should proactively evaluate insureds’ estimates for ACV/RCV distinctions and consider motions to strike inadequate estimates or limit damages, potentially leading to summary judgment or directed verdicts where no breach is established. By strategically asserting these defenses and scrutinizing policy compliance, insurers can effectively manage exposure in property damage claims.

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