This is part two of my earlier post, Florida Appellate Court Defines The Meaning Of The Term "Disinterested" As It Relates To Appraisal Provision, concerning the recent opinion in FIGA v. Branco.1 The 5th DCA opinion discussed the scope of appraisal. This is often a common issue that policyholders and insurance carriers have when a claim proceeds to appraisal – does the dispute concern coverage or amount of loss? Often the insurance carrier will assert that the dispute involves a question of coverage which is not appropriate for appraisal. Appraisal deals with an amount of loss question. Well the Branco case has a good discussion and analysis on this topic.
FIGA argued that the trial court was wrong in ordering the parties to appraisal because their dispute was over the “method of repair” rather than the “amount of loss.” The Florida Court considered the question:
[W]hether the method or extent of necessary repairs is within the scope of an ‘amount of loss’ appraisal policy provision.
The Court cited to an opinion from the Eastern District of Pennsylvania in support of its holding that:
FIGA’s interpretation of the appraisal clause in the policy would render the appraisal meaningless. Although FIGA may characterize the dispute over the necessary repairs as a coverage issue, in reality, it is an ‘amount of loss’ issue. There is no dispute that Homewise insured the Branco’s home at the relevant time for sinkhole losses, and FIGA has now admitted that the Brancos have sustained a covered loss. The logical disagreement between an insured and the insurer after a covered loss would be, as the court in Williamson stated, ‘disagreement as to whether the covered occurrence actually caused a certain portion of the putative damage, as well as disagreements about the scope and method of necessary repairs.’ The extent and cost of the necessary repairs to the Branco’s property will determine, in large part, the amount FIGA owes. To accomplish their task, the appraisers will have to consider the necessary method and scope of required repairs to evaluate the amount of the Brancos’ loss.
The 5th DCA held that the appraisal panel can determine the method or scope of the necessary repairs when determining the amount of loss. This opinion that looks at the issue with common sense. Appraisal is a contractual alternative dispute resolution process. When coverage is admitted for a loss, the appraisers should not be prohibited from deciding all issues other than the price for the scope of repairs the insurance carrier paid in its estimate. If the appraisal panel is so limited, it would essentially strike the appraisal provision from the contract, render it meaningless, and congest the court system with litigation over the disputes – the exact thing the appraisal provision is meant to avoid by contractual agreement.
1 Florida Insurance Guaranty Association v. Branco, 5D13-2929, 2014 WL 4648208 (Fla. 5th DCA Sept. 19, 2014).