A homeowners insurer paid its insured a depreciated estimate of the cost of repair or replacement for windstorm damage to his dwelling. This was done with the understanding that it would pay an additional amount warranted by the replacement cost provisions of the policy when the work was completed. The payment at the outset enabled the insured to restore his home as quickly as possible.

Acting as his own contractor, the insured dealt with subcontractors and finished the work for slightly less than the "depreciated" amount the insurer had already paid him. He submitted a claim for the difference between that sum and the estimate, and sued the insurer when it denied further payment because the insured had already been made whole. The insurer appealed a trial court judgment for the claimant.

The insured argued that, regardless of the work having been performed for a lesser amount, the insurance company was obligated to pay the balance based on its own estimate of the cost of repair or replacement. The appeal court noted that the insurance policy provided that the insurer:

"....will not pay more for loss in any one occurrence on a replacement cost basis than....the amount you actually spend that is necessary to repair or replace the lost or damaged property."

With regard to the issue presented, the court cited Krolls v. Aetna Casualty and Surety Company, 378 F. Supp. 392, 400 (S.D. Iowa), 503 F.2d 569 (8th Cir. 1974) as follows: "The Replacement Cost Endorsement is not of value to the plaintiffs until they have expended an amount greater than what they could recover under the basic policy coverage...." (The reference is to actual cash value, determined by depreciation.)

As the insured had already been made whole by the payment already made by the insurance company, in accordance with the policy's replacement cost provisions, the judgment of the trial court was reversed in favor of the insurer and against the insured.

(STATE FARM FIRE AND CASUALTY COMPANY ET AL, Appellants v. PATRICK ET AL, Appellees. Florida District Court of Appeals. No. 93-2779. December 14, 1994. CCH 1995 Fire and Casualty Cases, Paragraph 5095.)