Last week I discussed a trial court order issued in Hernando County, Florida, requiring State Farm to tender the money awarded to its insured through the appraisal process for a sinkhole claim. This week, I want to make policyholders aware that a carrier’s refusal to pay the appraisal award may lead to bad faith damages.

This situation often presents itself when the carrier argues it is not required to tender subsurface repair money until the policyholder enters into a subsurface repair contract. Further, the carrier takes the position that the money will be paid directly to the contractor doing the work instead of the policyholder. As discussed in my last post, the carrier requiring a contract before paying the subsurface money awarded through the appraisal process is improper. When the carrier refuses to timely pay the award, Florida Statute 624.155 holds the carrier accountable.

624.155 Civil Remedy –

(1) Any person may bring a civil action against an insurer when such person is damaged:

(a) By a violation of any of the following provisions by the insurer:

1. Section 626.9541(1)(I)

(b) By the commission of any of the following acts by the insurer:

1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests.

The damages available depend on whether the carrier’s conduct is specific to a particular claim or if it is proven to be a general business practice. If it is proven that the carrier has a general business practice resulting in bad faith conduct, punitive damages may be available against the carrier.1 Even if the carrier pays the appraisal award within the time allotted by the policy, the payment of the award constitutes a confession of judgment entitling the policyholder to attorneys’ fees.2

Because of this exposure, the carriers should cease from holding the appraisal award hostage and comply with the policy’s loss settlement position. If you find yourself in this situation, please contact competent legal professionals that will hold your carrier responsible.


1 §624.155(5): “No punitive damages shall be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are: (a) Willful, wanton, and malicious; (b) In reckless disregard for the rights of any insured; or (c) In reckless disregard for the rights of a beneficiary under a life insurance contract.
2 See Jerkins v. USF & G Specialty Ins. Co., 982 So. 2d 15 (Fla. 5th DCA 2008)(holding that payment of appraisal award acted as a “confession of judgment” in insureds’ suit, and, thus, insureds were entitled to attorney fees).