After a loss, a policyholder has a duty to take necessary measures to protect the property from further damage resulting from a covered peril. The question then becomes what costs associated with the emergency mitigation services are covered and is there a cap?
It is becoming more common in Florida for insurance policies to contain Reasonable Emergency Measures provisions, which are separate and distinct from “Coverage A-Dwelling and Coverage B-Other Structures.” These provisions provide additional coverage for the reasonable amounts incurred for emergency services rendered to protect the property from further damage. Generally, these clauses have a coverage limit and any amount incurred above this threshold requires authorization and approval from the insurance company before coverage is extended. The insurance policy will state the specific procedures required to exceed the default coverage limits for reasonable emergency repairs.
A Florida trial court recently issued an opinion regarding whether a Plaintiff’s failure to comply with the requirements of reasonable emergency measures limits recovery for mitigation benefits.1 In this case, the insurance company argued it satisfied its duty to pay for reasonable emergency repairs under the policy because it issued a payment in accordance with the coverage limit, which capped the damages at the greater of $3,000 or 1% of the home’s insured value. It further argued that no additional sums were due because at no point during the investigation of the claim did Plaintiff request authority to exceed the policy limit.
The policy language provided that the insurance company would not pay more than the greater of $3,000 or 1% of the home’s insured value, unless the insured submitted a request to exceed the cap. Once a request is made, the insurance company has 48 hours to approve or reject the request. If the insurance company misses the 48-hour deadline, the claimant may exceed the cap “only up to the cost incurred by [the insured] for the reasonable emergency measures necessary to protect covered property from further damage.”
After emergency mitigation work was completed, the Plaintiff submitted an invoice higher than the limit provided by the reasonable emergency measures provision via email. The email stated, “Please send payment for emergency services to your insured.” The insurance company acknowledged receipt of the email but it argued that it did not constitute a formal request. The carrier further acknowledged that it did not respond within 48 hours to approve or deny the request to exceed the coverage limit.
The court reasoned that based on the language of the policy as written, the request can be submitted even after the work has been completed and there was nothing in the language of the policy’s reasonable emergency measures provision that required any magic language or method to make a “request.” It also noted that the Plaintiff’s language was in the nature of a demand that was clearly encompassed within the ordinary meaning of the word “request.”
Policy caps for coverage for necessary emergency measures taken to protect the property from further damage are becoming more frequent in Florida and are being enforced by the courts. It is imperative for a prudent policyholder and their representatives to read and understand the requirements under the policy to ensure compliance.
1 24/7 Emergency Water Removal, Inc. v. Safepoint Ins. Co., No. 17-3505 COCE, 25 Fla. L. Weekly Supp.662a (Fla. Broward Cty. Ct. Oct. 31, 2017).