How to Force an Insurer into Appraisal in Florida – Satisfaction of Post-Loss Obligations

While appraisal can be used by an insurance company as a method of delaying claims and avoiding complete payment, there are circumstances when entering appraisal is in the best interest of the insured. Whatever the reason for seeking this cost-efficient procedure, it is important to consider what the courts view as prerequisites to utilizing their discretion to compel appraisal.

As an initial matter, why would an insurance company attempt to avoid the appraisal process, and what defenses are at their disposal? As stated by Merlin Law Group attorney Larry Bache in his blog post, When Can Policyholders Demand Appraisal?, the first question is simple: “Why? One can only speculate, but it likely has something to do with money.” Insurers are more limited in what defenses they may raise to appraisal, however, as described by the Florida Supreme Court:¹

Thus, where there is a demand for an appraisal under the policy, the only defenses which remain for the insurer to assert are that there is no coverage under the policy for the loss as a whole or that there has been a violation of the usual policy conditions such as fraud, lack of notice, and failure to cooperate….

An outright denial of coverage is a more straightforward defense predicated on arguing that appraisal is inappropriate for a claim where coverage is the primary dispute. The second defense, and the focus of this blog, is aimed at proving some violation on behalf of the insured establishing that appraisal is not ripe. This defense is generally asserted when there has been an admission of either full or partial coverage, but the insurer is against proceeding to appraisal. This assertion is critical to the insurer as courts in Florida have consistently held that prior to granting an insured’s motion to compel appraisal, there must be compliance with all post-loss obligations under the policy. The following rule statements demonstrate this concept in action:

Courts have held that an insured must comply with all of the policy’s post-loss obligations before the appraisal clause is triggered.² Sufficient compliance requires that all post-loss obligations be satisfied before the trial court can properly exercise its discretion to compel appraisal.³ Until these [post-loss obligation] conditions are met and the insurer has a reasonable opportunity to investigate and adjust the claim, there is no ‘disagreement’ (for purposes of the appraisal provision in the policy) regarding the value of the property or the amount of loss.⁴ Once the trial court determines that a demand for appraisal is ripe [that is, that a disagreement exists], the court has the discretion to control the order in which the appraisal and coverage determinations proceed.⁵

As these cases demonstrate, a primary step in compelling appraisal is asserting that the insured has satisfied all post-loss obligations as required under the policy. The insurer may then attempt to refute that assertion by citing the specific obligations allegedly violated by the insured. Courts have determined that a hearing is necessary to determine whether the party seeking appraisal has sufficiently complied with the policy’s post-loss requirements, as this is a “fact question” appropriately considered at an evidentiary hearing.⁶

Although at first glance one may conclude that these cases impose a substantial burden on insureds, it should be noted that proper handling of a claim by adjusters and plaintiff’s attorneys will by its very nature lead to compliance with all post-loss obligations.
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¹ State Farm Fire & Cas. Co. v. Licea, 685 So.2d 1285 (Fla. 1996).
² Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12 Inc., 54 So. 3d 578, 581 (Fla. 3d DCA 2011).
³ State Farm Florida Ins. Co. v. Cardelles, 159 So.3d 239 (Fla. 3d DCA 2015).
⁴ Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, 48 So. 3d 188, 191 (Fla. 3d DCA 2010).
⁵ Id.
⁶ Mango Hill Condo. Ass’n 12 Inc., 54 So. 3d 578 at 582.