Although aggrieved homeowners have multiple remedies to resolve insurance disputes with their insurance carrier, policyholders must make important strategic decisions about asserting these rights. Although the appraisal process can sometimes offer an efficient cost effective alternate dispute resolution option, litigation can be preferable depending on the circumstances. Since significant litigation activity can constitute a waiver of a party’s appraisal rights, policyholders should consult with an experienced insurance claims attorney to avoid making mistakes that adversely impact the outcome of their claims dispute.
In the case of FIGA v. Reynolds, the Florida 5th District Court of Appeals considered when extensive litigation activity constitutes a waiver of an insured’s appraisal rights under a homeowners insurance policy. The policyholders filed a claim with HomeWise that was attributed to sinkhole damage. When a dispute arose between the insurer and insured, the homeowners filed a breach of contract lawsuit. The insurance company answered the lawsuit and denied that the damage resulted from sinkhole damage or that the policyholder experienced any covered loss. FIGA was activated after HomeWise became insolvent. In June 2012, the homeowners filed an amended complaint that did not mention appraisal but did add FIGA.
When FIGA filed its answer to the lawsuit in August 2012, the insurer admitted that the damage was covered sinkhole damage at least to some extent. The policyholders subsequently filed a motion to compel responses to previously served interrogatories. In January 2013, the homeowners than filed a motion for summary judgment. A week after filing that motion, they noticed the case for trial. The insurance company again conceded that the damage was caused by covered sinkhole activity but disputed the amount of the loss in July.
The policyholders sent a letter to FIGA on October 7 making a demand for appraisal. The trial court subsequently granted the homeowners motion to compel appraisal and the insurer appealed that order. The 5th DCA observed that when a party actively participates in a lawsuit or conducts inconsistent with appraisal, the conduct constitutes a waiver of the right to appraisal. While the period of litigation and the number of filings in the lawsuit are relevant, the court indicated the most important consideration is whether the party acted in a way that is inconsistent with the appraisal process.
In applying these principles, the court noted that the policyholders accrued their appraisal rights in August 2012 when FIGA acknowledged the loss was caused by covered sinkhole activity. The demand for appraisal was not made until a full year had passed. During this period, the insured filed discovery motions, obtained partial summary judgment and noticed the case for trial. The time that passed before the appraisal demand combined with extensive litigation activity constituted a waiver of the insured’s appraisal rights according to the court.
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].