No payment? No problem ruled Florida’s 5th District Court of Appeal a few weeks ago in a homeowner’s insurance case where the carrier found partial coverage for the alleged loss, but did not issue payment because the amount covered was under the policy’s deductible. The appellate court reversed the trial court’s denial of the carrier’s motion to compel appraisal because coverage under the Insureds’ homeowner’s policy was not wholly denied. See Underwriters at Lloyd's, London v. Sorgenfrei, Case No.: 5D18-3002, 2019 WL 4383441 (Fla. 5th DCA Sept. 13, 2019) (per curiam).
Like many homeowners in Florida, Mr. and Mrs. Sorgenfrei filed an insurance claim with their homeowner’s insurance carrier for damage sustained to their home as a result of Hurricane Irma. Id. at *1. The carrier admitted coverage for a portion of the claimed damage, but did not issue payment for the covered portion of the loss because the amount of loss did not exceed the applicable hurricane deductible pursuant to the policy. Id. In its answer, the carrier also asserted an affirmative defense of pre-existing damage. Id. The 5th DCA agreed with the insurer’s argument that the carrier was entitled to appraisal because it did not wholly deny coverage of the claim. Id. The court reasoned that the carrier did not wholly deny coverage because the carrier found coverage for a portion of the claim and asserted that the remainder of the claim was not covered due to pre-existing damage. Id.
In reaching its conclusion, the appellate court examined another recent case from the Third District Court of Appeal—People's Tr. Ins. Co. v. Garcia, 263 So. 3d 231 (Fla. 3d DCA 2019). The carrier in Garcia denied coverage for a roof leak due to several policy exclusions, but found coverage for the ensuing interior water damage. Id. at 232-33. The Court explained that “causation is a coverage question for the court when an insurer wholly denies that there is a covered loss and an amount-of-loss question for the appraisal panel when an insurer admits that there is covered loss, the amount of which is disputed.” Id. at 235 (citing Johnson v. Nationwide Mutual Insurance Co., 828 So. 2d 1021 (Fla. 2002)).
The trend appears to allow a carrier to compel appraisal provided that at least some portion of the claimed loss is covered notwithstanding whether payment was tendered. Of course, the specific policy language will determine whether a carrier may compel appraisal without the agreement of its insured.