8 Fla. L. Weekly Supp. 247a
Insurance — Automobile — Coverage — Collision — Policy language and law of State of Florida allows for first party claims for diminished value when insurer elects to repair insured’s vehicle — Moreover, policy language as to terms “loss,” “repair,” and “replace” is ambiguous — Because the terms of policy are ambiguous, policy itself is ambiguous — Ambiguity must be construed in favor of insured — Insured’s motion for partial summary judgment as to coverage granted
COLLEEN SALVAGE, Plaintiff, vs. USAA CASUALTY INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case No. CCO-00-8885. December 15, 2000. Jerry L. Brewer, Judge. Counsel: Gregory S. Stark, McKeever, Albert & Barth, Winter Park, for Plaintiff. Chad S. Lucas, Cabiniss, Conroy & McDonald, LLP, Orlando; and Barry A. McClenahan, San Antonio, TX, for Defendant.
ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
This matter came before the Court on Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Cross Motion for Summary Judgment, on December 7, 2000, and counsel for each side having an opportunity to make argument, it is
ORDERED AND ADJUDGED as follows:
On May 24, 2000, Plaintiff, COLLEEN SALVAGE, had a policy of auto insurance with USAA CASUALTY INSURANCE COMPANY which included Collision Coverage. On that date, COLLEEN SALVAGE was involved in an automobile accident resulting in damage to her2001 Oldsmobile Aurora. Plaintiff made a claim for collision damage, and USAA CASUALTY INSURANCE COMPANY elected to repair her vehicle. Plaintiff also made a claim for diminished value. Defendant denied Plaintiff’s claim for diminished value which resulted in this lawsuit.
Plaintiff hereby movesfor Partial Summary Judgment as to coverage with the amount to be determined. Defendant moves for Summary Judgment on that same issue.
The policy issued by USAA CASUALTY INSURANCE COMPANY included collision coverage under Part D — Physical Damage Coverage. With respect to Collision Coverage, the policy states, in pertinent part, on page 14 of 20: “We will pay for direct and accidental loss caused by collision to your covered auto, including its equipment, minus any applicable deductible shown in the Declarations.” Defendant’s policy, however, does not define the words “repair”, “replace”, or the term “loss.”
Defendant maintains that first party diminished value is not covered under the policy based on the Limit of Liability provision set forth on page 14 of 20. Under the Limit of Liability section, the policy reads:
“Our limit of liability for loss would be the lesser of the actual cash value of the property or part damaged or stolen, or the amount necessary to repair or replace the property or part.”
However, under Florida law, the Arch Roberts case sets forth the carrier’s duty as follows:
“Upon making the election [to repair] it was then obligated to restore it to substantially the same condition as to function, appearance and value as existed before the accident. Should it fail to do so, it would then be liable to the owner for its value immediately prior to the accident.” (Emphasis added)
Arch Roberts and Company v. Auto-Owners Insurance Company, 305 So.2d 882 (Fla. 1st DCA 1974). Additionally, this issue has been addressed in numerous states. The great majority of the states adopt the view that diminished value is covered. See Delledonne v. State Farm Mut. Auto. Inc. Co., 621 A.2d 350, 353 (Del. Super. Ct. 1992) and the cases cited therein. As such, this Court follows the duty set out in Arch Roberts and the majority of jurisdictions in the United States which allow for first party diminished value when an insurer elects to repair the insured’s vehicle.
In addition to finding that the policy language and law of the State of Florida does cover first party claims for diminished value, this Court holds that the policy itself is ambiguous as to the terms “loss,” “repair,” and “replace.” The Defendant filed with the Florida Department of Insurance on March 13, 2000, some proposed changes to its policy, which it later withdrew, in which they attempted to define the term “loss.” Defendant was to define the term “loss” as not including any diminution in value that remains after the damaged or stolen property or parts thereof have been repaired or replaced. The Defendant admitted this was added to “clearly state” we do not cover any diminution in value. Insofar as Defendant needed to clarify that matter, the term “loss” itself is ambiguous in the policy.
Defendant had the opportunity to define the terms of its policy, as well as exclusionary language, but chose not to do so when it drafted its policy. The terms of the policy referenced by the parties are undoubtedly subject to more than one reasonable construction. Therefore, the policy itself is ambiguous and, as such, the ambiguity must be construed in favor of the Plaintiff.
In Tropical Park, Inc. v. United States Fidelity & Guaranty Co., 357 So.2d 253 (Fla. 3d DCA 1978), the court stated:
“The law of Florida is well settled that a contract of insurance prepared by an insurance company must be construed liberally in favor of the insured and strictly against the insurance carrier. Where the terms of the insurance contract are susceptible of two reasonable constructions, that interpretation which will sustain coverage for the insured will be adopted . . . .” Id. at 256.
Additionally, from a public policy standpoint, it should be noted how the Defendant’s policy assesses a “total loss” payment. The policy defines actual cash value as “the amount which it would cost to replace the stolen or damaged property with new property of like kind and quality, less allowance for depreciation and physical deterioration.” Clearly, the Defendant derives a benefit by reducing a total loss payment by pre-accident diminished value. Conversely, in order to meet their contractual obligation to fully indemnify their insured, it would appear logical that if the Defendant elects to repair, Defendant must repair or replace the vehicle to its pre-accident value. Failure to do so subjects it to paying benefits for diminished value.
Accordingly, it is ORDERED AND ADJUDGED as follows:
1. Plaintiff’s Motion for Partial Summary Judgment is hereby GRANTED.
2. Defendant’s Motion for Summary Judgment is hereby DENIED.
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