What Constitutes a Total Loss in Florida?

You may hear many unfamiliar words and phrases during the insurance claims process in Florida. Filing a claim after a hurricane, fire or another covered event can be confusing as a claimant – especially if this is your first time seeking homeowners insurance benefits. One of the phrases you may encounter during a homeowners insurance claim is total loss.

What Is a Total Loss?

Total loss means the costs of repairing your home or building are simply too high. An appraiser has placed the value of your losses at an amount that meets or surpasses the total value of the property, making it a poor financial decision to try to repair the home. When the costs of repairs or rebuilding exceed the pre-event value of a property, it makes more sense to pay the claimant a sum that will allow him or her to rebuild from the ground up or purchase a new building elsewhere. These cases are total losses.

Rather than paying benefits to repair a total loss, your homeowners insurance company will write you a check for the full value of your policy. According to Florida’s Valued Policy Law, an insurance company lawfully has to pay out a client’s policy limits for a total loss. Florida Statute 627.702 says that in the event of the total loss of an insured building, structure, mobile home or manufactured building in a covered peril, an insurance company has to pay the property owner the full policy limits, even if this exceeds the appraised value of the property.

The Total Loss Test in Florida

Before an insurance company will send you a check for the full amount of your policy, its insurance claims adjuster must confirm that your home or property is a total loss. The insurance company can use a few different tests. The first is to check for the identity of the building. If the identity of the building as a client’s home remains intact, it may not be a total loss. If the natural disaster or event was so severe that it would be unreasonable for the family to still think of it as home, however, it is a total loss. An insurance company may also use the constructive total loss test. This assesses whether the building would be able to meet property, safety and health codes due to the amount of damage it sustained. If the structure would violate state or local regulations, it will be a total loss.

What If an Insurance Company Does Not Pay Enough for Your Total Loss?

If your home or building is a total loss, your insurance provider should pay out the full value of your policy under state law. To qualify for insurance benefits, the event that damaged your home must be a covered peril. If you did not have flood insurance, for example, your insurance company may not pay for your damages if a flood caused them. You or your lawyer must be able to prove that a covered peril caused your home’s irreparable damages. If you contributed to the damages in any way, your insurance company may also have grounds to deny benefits.

Assuming you have a valid claim to insurance benefits, your provider should pay out your policy limits. This may or may not match the actual pre-event value of your home or property. If your coverage falls short, you may be out of luck. This is why it is important to update your homeowners insurance policy as the value of your home fluctuates. If your insurance company is not treating you fairly, or if you believe you are eligible for additional coverage through another outlet, contact a Tampa insurance lawyer for advice. An insurance lawyer can help you with each stage of your claim after a serious natural disaster causes a total loss.