Recently, Florida’s Fifth District Court of Appeal affirmed an order compelling Florida Insurance Guaranty Association (FIGA) to participate in an appraisal of a policyholder’s sinkhole claim.1 The insureds had originally filed suit against Homewise Preferred Insurance Company in 2010, after Homewise denied coverage. But in 2012, FIGA notified the insureds that it was assuming the handling of the claim because Homewise had become insolvent and, for the first time, FIGA admitted that the sinkhole claim was covered under the subject policy.
The policyholders then substituted FIGA for Homewise as the defendant/insurer. Shortly after FIGA responded to their amended complaint, the homeowners moved to compel FIGA to participate in the appraisal process provided under the policy issued by Homewise. FIGA opposed the appraisal demand, in part, because two years had passed since the insureds had originally filed suit against Homewise. FIGA’s position was that the insureds had waived their right to appraisal by actively litigating their case against Homewise during this two year period. The trial court subsequently granted the homeowner’s motion to compel appraisal. FIGA appealed the trial court’s order.
Florida’s Fifth District Court of Appeal ("5th DCA") found the fact that the insured and Homewise had engaged in extensive discovery and that two years had passed since the insured filed suit against Homewise to be "irrelevant" to the question of whether the insured had waived their right to demand appraisal in that case. The 5th DCA reasoned, "the waiver analysis does not turn entirely on the amount of time the case was pending; it focuses on whether the Insureds acted inconsistently with their appraisal rights."
The appellate court noted appraisal was "warranted" in this case only after FIGA admitted coverage for the sinkhole claim (which up to the demand for appraisal, had been denied by Homewise). Accordingly, the sole question was whether the homeowners "actively litigated" their case against FIGA after FIGA accepted coverage for the loss. The homeowners in this case merely amended their complaint to substitute FIGA before they demanded appraisal—they did not request any discovery, file any motions, or otherwise indicate that they wanted to litigate the amount-of-loss dispute instead of resolving it through appraisal. Thus, the court held the insureds did not act inconsistently with or waive their right to demand appraisal.
While Florida courts have not yet established a bright-line time frame for demanding appraisal, if you are considering resolving an insurance dispute through appraisal you should consult with an experienced professional early in the claims process to determine whether the right steps are being followed.