Insurer Not Required To Pay Overhead & Profit Until Incurred By Insured

In Trinidad v. Florida Peninsula Insurance Company (3D10-1087), the Third District held that the insurance company was not liable to the insured for "overhead and profit" costs unless the insured had actually incurred those costs. The court stated that "Trinidad’s lawsuit was based on Florida Peninsula’s failure to pay him for overhead and profit. Because Trinidad’s insurance policy is unambiguous, and he has not contracted to incur or incurred these costs, the trial court properly granted summary judgment in favor of Florida Peninsula, and we affirm."

After a discussion of the facts, the court stated:

In granting summary judgment in favor of Florida Peninsula, the trial court concluded: 1) the policy was unambiguous; 2) it excluded payment for overhead and profit unless such expenses are either incurred by the insured or reflected in a contract that binds the insured; and 3) because neither event occurred in this case, Trinidad was not entitled to such payments. We agree.

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The policy, therefore, unambiguously provides that Florida Peninsula pay replacement costs or the costs Trinidad actually incurs or which he demonstrates he is likely to incur....Trinidad’s policy is not an actual cash value policy, it is a replacement cost policy, which only requires Florida Peninsula to pay costs incurred by Trinidad (money Trinidad actually spent or which he became contractually obligated to spend for repair of the damages) when repairing the property. Not all repairs require the services of a general contractor. Because Trinidad has not hired a general contractor, spent any money for overhead and profit, or become contractually obligated to pay for such costs, payment for a contractor’s overhead and profit is not contractually owed by Florida Peninsula under the policy.

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The policy’s unambiguous terms require Trinidad to either hire a contractor who charges for overhead and profit or to incur expenses for overhead and profit before Florida Peninsula is required to pay for such costs. Because he did neither, Florida Peninsula was not obligated under the policy to pay Trinidad for overhead and profit, and the trial court correctly granted summary judgment in Florida Peninsula’s favor.