When you become embroiled in a dispute with your homeowners insurance carrier, there are a number of tools that can be employed prior to filing a lawsuit for breach of contract and insurance bad faith.  The appraisal remedy provided for under your homeowners policy can be a valuable method of settling certain insurance disputes.  However, the appraisal process is limited because it does not apply to “coverage disputes”.  Insurance companies often test the scope of this term when searching for a basis to avoid submitting a claim to appraisal. 

A case from another jurisdiction, Currie v. State Farm Fire & Casualty Company provides an example of how insurance companies utilize this strategy in an attempt to avoid appraisal.  In Currie, the policyholder’s home was damaged in a hurricane.  After the insurance company had the property inspected, it estimated the loss at $59,940.54 while the policyholder estimated the amount of the damages at $350,000.00.  The insurance company agreed to conduct a supplemental investigation that resulted in an increase in the insurer’s estimate of the damages by approximately $9,500.00.  The insured attempted to invoke the appraisal provision of his policy, but the insurance company refused because it claimed that a coverage dispute still existed.  The insured filed suit for breach of contract and bad faith against the insurer.

The insurance company took the position that unresolved issues remained beyond the value of the damage.  According to the insurer, the coverage issue had not been resolved because a disagreement existed regarding the “scope of coverage”.  State Farm indicated that its refusal to participate in the appraisal process was predicated on damage to items beyond those to which the carrier had admitted liability.  An example included stripping and resurfacing the home’s wood floors.  The insurer essentially attempted to re-characterize a dispute over the “value of the loss” into a coverage dispute.

The court quickly dispatched this tactic by indicating that the insurer was being “disingenuous” by trying to characterize the disagreement as a coverage dispute.  The court conceded that an admission of liability by the insurance company was a condition precedent to the appraisal process.  In other words, appraisal is limited to cases where the sole issue is the monetary value of the loss.  However, an actual coverage dispute involves the insurance company claim that an exclusion precludes coverage of a peril according to the court.  The court observed that the dispute in this case was limited to the extent of the damage which is precisely the type of issue to be submitted for appraisal.

While this case is not controlling in Florida because it is from another state, this same issue arises in coverage disputes in our state.  If your insurance company refuses to agree to the appraisal process because of a dispute over the “extent of coverage”, you should seek immediate legal advice from an experienced insurance claims attorney.

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

J.P. Gonzalez-Sirgo
J.P. Gonzalez-Sirgo, P.A.
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