What’s good for the goose is good for the gander. If an insurance policy says ordinance and law is an incurred expense, then an appraisal panel cannot set the amount of loss for ordinance and law until it is incurred.

We often discuss the appraisal process. If the parties use the appraisal process to set the amount of loss for a claim and the appraisers set the amount of loss and indicate they are not appraising the ordinance and law portion of the claim, the policyholder can later seek the cost of the roof replacement under ordinance and law, after the expense is incurred. This makes sense because the policyholder would not have incurred that loss until the official building department required compliance with current ordinances in to complete repairs. At that point, the policyholder incurs an additional insurance-related loss, for which they have the right to an appraisal or payment.

In a recent case,1 the policyholder contended he was entitled to an appraisal of “Ordinance and Law” coverage based on roof damage caused by Hurricane Wilma. The carrier maintained the appraisal panel had already determined all of the damages related to Hurricane Wilma, and the policyholder could no longer seek ordinance and law damages.

The appraisal award allowed for the removal and replacement of two squares of concrete tile roof and other damages unrelated to the roof. The award stated “Ordinance and Law” was “not appraised.” The insurer paid the award. The policyholder’s contractor then applied to the City of Weston for a roofing repair permit, in which he claimed about 34% of the roof area needed repair. The roofing repair permit was rejected by the City the building code required replacement of the entire roof system to current code if more than 25% of the total roof area was damaged.

The policyholder asked his insurer to pay for the entire roof repair under Ordinance and Law coverage. The insurer responded “this claim was settled in appraisal on April 27, 2009 in which the umpire rejected your request for law and ordinance.”([Emphasis supplied). The policyholder filed a Declaratory Judgment action, seeking a ruling that the insurer must participate in an appraisal for Ordinance and Law coverage. The trial court granted the insurer’s motion for summary judgment, and the policyholder appealed.

The appellate court held Ordinance and Law is not recoverable until it is incurred and could not have been appraised at the time of the original appraisal. At the time of the original appraisal, the policyholder had not applied for the roof repair permit and could not have incurred the expense until the City required compliance with current ordinances. At that point the policyholder incurred additional loss, for which he had the right to an appraisal.

The appellate court overturned the trial court order and remanded the case for further proceedings. This was good news for the policyholder and likely many others who may have similar arguments pending before Florida trial courts.

1 Jossfolk v. United Prop. & Cas. Ins. Co., No. 4D12–443 (Fla. 4th DCA March 20, 2013).