Iris Kuhn

The purpose of Section 627.7015, Florida Statutes titled “Alternative procedure for resolution of disputed property insurance claims” is to encourage insurance companies and policyholders to resolve their disagreements regarding disputed property insurance claims without the necessity of litigation or appraisal. The statute requires, in part:

(2) At the time a first-party claim within the scope of this section is filed by the policyholder, the insurer shall notify the policyholder of its right to participate in the mediation program under this section.1

The statute defines a “claim” as “any dispute between an insurer and a policyholder relating to a material issue of fact. . . .”2 and it places the burden on the insurance company to provide notice to a policyholder of his or her right to participate in the statutory mediation process. If an insurance company fails to follow the notice requirements mandated in subsection (2) of the statute, the policyholder is not required to participate in the appraisal process as a condition precedent to filing a breach of contract action against the insurance company for failure to pay benefits due and owing under the policy.3

Recently, Florida’s Third District Court of Appeal decided a case involving Section 627.7015.4 The appellate court reversed the trial court’s decision compelling appraisal of the insureds’ claim where a dispute had arisen, and the insurance company demanded appraisal before it provided written statutory notice to its policyholders of their right to mediate under Section 627.7015.

In October 2017, the policyholders placed their insurance carrier, First Protective Insurance Company d/b/a Frontline (“Frontline”), on notice of their claim for property damage resulting from Hurricane Irma. A disagreement arose between the parties over whether the insureds’ windows needed to be replaced or simply repaired. The policyholders argued that their window model was no longer manufactured, and the windows would require a complete replacement.

As the dispute continued, in November 2017, the policyholders requested that Frontline provide them with copies of photographs taken by Frontline’s adjuster as part of his report. Frontline provided the report but refused to produce the photographs, alleging they were protected by the work-product doctrine. The appellate court noted that Frontline’s invocation of the work product privilege was significant because it implied that Frontline anticipated litigation as early as November 2017.5

In December 2017, the policyholders threatened to file a complaint with the Florida Department of Financial Services. In response, Frontline produced a sample estimate, which left most of the insureds’ questions and concerns unanswered. The policyholders then informed Frontline of their intent to retain counsel.

It was not until several months later that Frontline sent a written demand to the policyholders invoking the appraisal process under the policy. In June 2018, after Frontline had invoked the appraisal process, it provided notice to its policyholders of their right to pursue mediation under section 627.7015. In July 2018, the policyholders filed suit and Frontline moved to compel appraisal. The trial court granted Frontline’s motion, and the policyholders appealed the trial court’s decision.

The Third District concluded that Frontline could not demand appraisal without first providing its policyholders with notice of their right to mediation under state law. The court reasoned:

[S]ection 627.7015 furthers the ’particular need for an informal, nonthreatening forum for helping parties. . . because most homeowner’s . . . residential insurance policies obligate [the] insureds to participate in a potentially expensive and time-consuming adversarial appraisal process prior to litigation.6

It further noted that,

Frontline’s actions are in derogation of the salutary purpose of section 627.7015, i.e., to expeditiously bring the parties together for a mediation without any of the trappings of an adversarial process.7

The court held that once a dispute has arisen, an insurance company cannot demand appraisal before providing the policyholder with notice of his or her right to participate in mediation. By doing so, an insurer waives its right to appraisal.

The waiver of appraisal is a complicated matter. Appraisal can be waived through many actions, and it varies from state to state. Never hesitate to contact a Merlin Law Group attorney with specific questions on this topic or others. Please make certain to use our search function if you have other questions about property insurance claims and policyholder rights.
1 §627.7015(2), Florida Statutes (Emphasis added).
2 §627.7015(9), Florida Statutes.
3 §627.7015(7), Florida Statutes.
4 Kennedy v. First Protective Ins. Co. d/b/a Frontline Insurance, No. 3D18-1993, 2019 WL 1051386 (Fla. 3rd DCA Mar. 6, 2019).
5 Id. at *1.
6 Id. at *2. See also Universal Prop. & Cas. Ins. Co. v. Colosimo, 61 So. 3rd 1241, 1242 (Fla. 3rd DCA 2011).
7 Id. at *2.