When an insurance carrier engages in conduct like failing to conduct a reasonable investigation of a claim, refusing to communicate about a claim or otherwise willfully refuses to act in good faith while processing a claim, policyholders have a variety of options. Those options might include a neutral evaluation, appraisal or a lawsuit. Each of these approaches involve different procedures, rules and remedies.
It is not uncommon for an insured to demand that a homeowners claim dispute be submitted to appraisal over the objections of their insurance company. There are a number of common justifications used by insurance carriers to oppose submitting a claim to the appraisal process. One common reason is that the issue of liability or coverage has not been resolved. Appraisal is appropriate to address the value and method or repair, but the appraisal process cannot be used to determine the issue of whether a claim is covered.
The most frequently asserted opposition advanced by insurance carriers to oppose appraisal is that the insured waived the right to appraisal. The issue of waiver in this context is complex and impacted by the interplay of a number of factors. While delay in asserting appraisal is certainly relevant, the passage of time between the loss and the motion to compel appraisal typically is not sufficient to constitute waiver without more. The key issue is whether a policyholder engages in litigation during this interim period because litigation is inconsistent with appraisal. While extensive litigation in the form of amended pleadings, discovery and the filing of motions may constitute a waiver, these steps along with the passage of time still might be insufficient.
A recent decision by the Florida Fifth District Court of Appeal makes clear that even extensive litigation activity and the passage of time together will not constitute a waiver in some circumstances. In the case of Florida Insurance Guaranty Association (FIGA) v. Martucci, et al, the 5th District reversed the trial court by finding that a claim was covered despite the fact both parties had engaged in extensive litigation in the form of discovery, pleadings and motions.
In Martucci, the court emphasized that the particular timeframe within which litigation activity occurs is an important consideration when assessing a waiver claim. The policyholders filed a lawsuit against their original homeowners carrier on September 2010, and both parties conducted significant discovery prior to FIGA providing notice to the policyholders in December 2012 that it was taking over the claim after Homewise became insolvent. FIGA did not concede that the claim was covered until July 19, 2012. The policyholders amended their complaint to substitute FIGA for Homewise shortly thereafter. The trial court ruled that the policyholders had waived their appraisal rights.
The appellate court indicated that a waiver of appraisal occurs when the party actively participates in litigation or other conduct inconsistent with appraisal. However, the court also reasoned that appraisal cannot be sought until the insurer concedes coverage because this ADR method is limited to the issue of the value of loss. Under this analysis, the earliest point that the policyholders could have sought appraisal was July 19, 2012. Although extensive discovery occurred prior to this date, those acts were not inconsistent with appraisal because the insureds did not yet have the right to seek appraisal at that stage of the process.
The sole litigation activity by the insured between July 19, 2012 and five months later when the insured sought to compel appraisal was amendment of the complaint to substitute FIGA as the defendant. This limited litigation activity during the five months between the time that the policyholders’ right to seek appraisal became available and their request to compel appraisal was not sufficient to constitute a waiver.
This case provides further evidence of the subtle issues that must be considered when evaluating waiver of appraisal claims. If you have questions about Florida property insurance claims, you are welcome to contact my Florida insurance claims dispute 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.