Fla. Sup. Ct. Rules Amount of Loss Can Be Determined Before Coverage is Decided

Posted by Phillip Warren | Mar 22, 2024 | 0 Comments

This is a common tactic we have seen insurance companies take.  They issue a small initial payment, that is woefully inadequate.  The policyholder sends proof that the damages are much greater and demands appraisal—a less formal, extradited process where a neutral party determines the amount in dispute.  In response, the insurance company refuses to fulfill its contractual obligation to participate in the appraisal, claiming their “investigation is ongoing” or they have not made a final decision whether they will deny coverage for all, or a portion, of the claim.  This is a textbook stall tactic that has allowed insurance companies to continue their delay of full payment on the claim.  Thankfully, the Florida Supreme Court recently curtailed this tactic in determining the trial court can decide in which order these two issues (amount of loss versus coverage) can be decided.  Here is how this decision could benefit your claim.

The American Coastal v. San Marco Condos Dispute

Our firm has had to take American Coastal to trial on a Hurricane Sally condominium case very similar to this because they refused to pay timely and in full.  Much like in our case, in San Marco American Coastal only paid $192,000 on a claim that was valued in excess of $8,000,000. 

Due to the great disparity between American Coastal's $356,000 estimate and the condominium association's $8,000,000 estimate, San Marco—as it is entitled to do pursuant to American Coastal's policy—demanded an appraisal.  In violation of its contractual obligation to participate in the appraisal, American Coastal refused San Marco's appraisal demand claiming its “investigation was still ongoing.”  This is the same tactic American Coastal took in our case for months on end, leaving the condominium association no choice but to file suit against American Coastal to finally recover on the claim.  Similarly, San Marco sued to force American Coastal to participate in the appraisal. 

Read American Coastal Ins. Co. v. San Marco Villas Condo Ass’n, Inc., 2024 Fla. LEXIS 185 (Fla. 2024)

American Coastal's Attempt to Use a Coverage Defense to Avoid Appraisal

After San Marco invoked appraisal, American Coastal denied coverage claiming San Marco had committed fraud by exaggerating the amount of the loss.  American Coastal made this same allegation against our Hurricane Sally condominium client in hopes of avoiding its obligation to pay the claim.  Because this presented a coverage defense in San Marco, American Coastal argued the appraisal could not go forward because the coverage issue had to be determined first.  The trial court disagreed, and American Coastal appealed.  Florida's Second District Court of Appeals disagreed, and American Coastal appealed, forcing the San Marco Condo association to endure years of litigation costs and financial strain.  Thankfully, the Florida Supreme Court also disagreed and ruled in favor of the policyholder.  The Court found the language of American Coastal's policy—which contained a “retained-rights provision,” granting American Coastal the right to deny coverage even if there was an appraisal—afforded the trial court discretion to determine in which order the amount of loss and coverage issues would be determined. Meaning, the trial court could compel American Coastal to appraisal and determine the coverage issue after. 

How This Ruling Could Impact Your Claim

Insurance companies will often use any tactic available to delay full payment on a claim.  Refusing to participate in your contractually guaranteed right to appraisal is one of them.  If you ever find yourself in a dispute with your insurance company over the cost of your damage and the insurance company is refusing to participate in appraisal based on an alleged coverage defense, the San Marco opinion will support your right to force your insurance company to appraisal.  Obtaining a determination of the amount in dispute from a neutral third party can often act as a very effective catalyst for settlement of the claim.  We are grateful for the Florida Supreme Court's attention to this issue and its detailed and well-reasoned ruling on behalf of the policyholder. 

The San Marco opinion also highlights two things.  One: how hard and long insurance companies will fight to avoid paying claims, as the San Marco dispute arose out of Hurricane Irma in 2017.  Two: how complicated insurance claims can be.  If you find yourself in a dispute with your insurance company, the best action you can take to protect yourself and your claim is to hire an experienced, knowledgeable professional to assist you with your claim.  At Taylor, Warren, Weidner, Hancock & Barnes, our attorneys are committed to helping policyholders like you recover what they are owed from their insurance company.  We also never require any fee or obligation to simply talk to you about your claim and share our knowledge and thoughts with you.  If you have questions about your insurance claim, contact us.  We're here to help you. 

Experienced insurance dispute attorneys Pensacola Florida

About the Author

Phillip Warren

Phillip devotes the same honor, courage, and commitment to his clients as he did in the USMC.


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