Sinkholes can cause Florida homeowners to suffer severe financial losses. While many homeowners have sinkhole coverage, insurance carriers often deny sinkhole claims. Insurance companies often allege that the damage is not the result of sinkhole activity but rather routine settling or other uncovered earth movement. The Florida Neutral Evaluation Program provides a statutory form of alternate dispute resolution (ADR) that can be used to resolve sinkhole claims disputes when a disagreement exist regarding the cause or extent of sinkhole damage. This blog recently reviewed a series of Florida appellate court cases that analyzed the types of litigation activities that constitute a waiver of the contractual process of appraisal.
In the recent case of Citizens Property Insurance Corporation v. Trapeo, the Florida 2nd District Court of Appeals addressed the issue of whether litigation activity also constitutes a waiver of the statutory remedy provided by the Neutral Evaluation Program. The homeowner’s residence was severely damaged by sinkhole activity. The policyholder filed a claim, but the experts for the insurer and insured disagreed on the appropriate remedial action necessary to properly repair the damage. The homeowner filed a lawsuit for breach of contract. Citizens engaged in discovery before filing a request for neutral evaluation. The insurer also moved for a stay of litigation until completion of the neutral evaluation process and five days after filing of the neutral evaluator’s report under the statute.
The trial court denied the stay of litigation and found that the insurer’s participation in the litigation process constituted a waiver of the right to compel use of the neutral evaluation process. The appellate court ruled that the court lacked jurisdiction to rule on the waiver issue and that the trial judge committed reversible error in denying the stay of litigation. The court analyzed the language of Florida Statute Section 627.7074 which sets for the neutral evaluation process. The section authorizes an investigation and report by an impartial expert.
If either party elects to pursue the neutral evaluation process, the litigation is stayed, and the parties are compelled to participate in this form of ADR. The expert who is selected must be granted reasonable access to the property, so an investigation can be conducted to determine the cause and severity of the damage. If the report by the neutral evaluator finds that the damage is caused by sinkhole activity, the insurance company must reimburse the insured for costs associated with the evaluation.
This decision in the Trapeo case is concerning because it enables the insurer to participate in the litigation process and analyze the insured’s case before choosing the neutral evaluation process. The insurer is essentially allowed to have its cake and eat it too. This is just one way an insurer might attempt to manipulate the process if you do not have an experienced insurance claims attorney protecting your interest.
If you have questions about Miami-Dade sinkhole claims, you are welcome to contact my Miami insurance claims law firm. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.