State Farm Florida Insurance Co. v. Phillips, 134 So. 3d 505

In July 2010 State Farm issued the Phillipses a homeowners policy containing a general loss payment clause and a separate sinkhole/catastrophic ground cover collapse loss-settlement clause.
The general loss payment clause provided payment 20 days after proof of loss and agreement, or 60 days after proof of loss upon entry of a final judgment or filing of an appraisal award.
The sinkhole loss-settlement clause (modeled on Fla. Stat. § 627.707(5)(b)) allowed the insurer to limit payment to actual cash value for subsurface repairs until the insured entered a contract for building stabilization/foundation repairs, after which the insurer must pay repair costs as work is performed.
In February 2011 a sinkhole damaged the Phillipses’ home; an appraisal established the loss amounts, including subsurface stabilization and foundation repairs.
The trial court ordered State Farm to pay replacement cost for subsurface repairs before the Phillipses had contracted for those repairs; State Farm appealed, arguing the policy (which incorporated the statutory language) authorized a holdback until the insured contracted for repairs.

Issue	Plaintiff's Argument (Phillips)	Defendant's Argument (State Farm)	Held
Whether State Farm may withhold replacement-cost payment for subsurface sinkhole repairs until the insured enters into a contract for those repairs	Policy and statute are permissive only; State Farm must pay replacement cost once appraisal fixes the loss	Policy incorporates § 627.707(5)(b) and thereby may limit payment to ACV until the insured contracts for repairs, then pay as work is performed	Reversed in part: insurer may withhold replacement-cost payment until insured contracts for stabilization/foundation repairs because policy incorporated the statutory alternative payment method

State Farm Fla. Ins. Co. v. Nichols, 21 So.3d 904 (Fla. 5th DCA 2009) (held insurer could not use statutory payment method where policy did not incorporate it)
Kingsway Amigo Ins. Co. v. Ocean Health, 63 So.3d 63 (Fla. 4th DCA 2011) (statutory permissive payment methods must be clearly elected in the policy)
Geico Indem. Co. v. Virtual Imaging Servs., Inc., 79 So.3d 55 (Fla. 3d DCA 2011) (policy must clearly and unambiguously elect alternative statutory payment method)
Discover Prop. & Cas. Ins. Co. v. Beach Cars of W. Palm, Inc., 929 So.2d 729 (Fla. 4th DCA 2006) (interpretation principles and giving effect to all policy provisions)
U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871 (Fla.) (requirement to give effect to every contract provision)