Certain property insurance policies provide that if the insurer or insured fail to agree on the quantum of the loss, either party can demand that the quantum be decided by appraisal. Some policies provide this is a permissible process. Others provide the process is mandatory provided that a party demands appraisal. This is something that should be reviewed in a property insurance policy when a dispute arises.
“[A]n insurer is entitled to enforce a policy appraisal provision [in a property insurance policy] where it has not wholly denied coverage.” State Farm Florida Ins. Co. v. Speed Dry, Inc., 45 Fla. L. Weekly D787a (Fla. 5th DCA 2020).
In State Farm Florida Ins. Co., the property insurance policy included a mandatory appraisal provision that provided that either the insured or insurer could demand that the amount of the loss be set by appraisal. As a result of storm damage to the insured’s house, the issue was whether the insurer could replace missing or damaged shingles with shingles that did not match the other shingles on the roof. The insured assigned the right to proceeds to Speed Dry which filed an action for declaratory relief that the insured was entitled to either roof replacement or matching roof shingles. The property insurer moved to compel appraisal pursuant to the property insurance policy.
While the trial court denied the insurer’s motion to compel appraisal, the Fifth District Court of Appeal reversed. The insurer did not dispute there was a covered loss. Instead, the dispute centered on the amount of the loss – the insurer acknowledged there was a covered loss but disputed the amount associated with the loss. “Because [the insurer] did not wholly deny coverage for storm damage to the [insured’s] roof, it was entitled to compel appraisal pursuant to the terms of the insurance policy.” State Farm Florida Ins. Co., supra
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