Court agrees with insurance company
A Florida appeals court has once again upheld the right of a property insurance company to use its own repair contractor instead of making a loss payment to settle claim damages. The most recent case is the fourth one in the past 12 months in favor of People’s Trust Insurance, one of Florida’s domestic carriers.
When Miguel and Maria Tosar’s Miami home was damaged by Hurricane Irma in September 2017, they filed a claim with People’s Trust, and the company sent its field adjuster to examine the damage. The adjuster’s report put the replacement cost of repair at $7,083.64. When the $6,180 hurricane deductible and $32.49 non-recoverable depreciation were subtracted, the couple’s net claim was $871.15. The company exercised its right to repair within 30 days of inspection, as the policy allowed, with the work to be performed by Rapid Response Team (RRT), its in-house repair firm.
The Tosars replied with a notice disputing the insurance estimate and scope of repairs, as allowed under the policy, which prompted People’s Trust to invoke appraisal. But rather than go to appraisal, the Tosars filed suit in Miami-Dade Circuit Court, alleging breach of contract. The company filed to compel appraisal, its right to repair, and payment of the deductible and the circuit court agreed to order the appraisal but reserved ruling on the rest.
An appraisal panel accepted the Tosar’s adjuster’s valuation of $54,146 for repair costs. People’s Trust again filed to compel right to repair and payment of the deductible, which the court denied. The Tosars filed a motion for summary judgement on their breach of contract claim, seeking the loss payment, so they could pay another contractor they’d hired to do the repair work. People’s Trust countered with its own summary judgement motion claiming the Tosars had breached the policy for failure to authorize RRT to proceed with repairs. The circuit court ruled in favor of the Tosars and ordered People’s Trust to pay the appraisal award minus deductible. People’s Trust appealed to the Third District Court of Appeal.
In its opinion filed last month, the appeals court found that the Tosars’ lawsuit “falsely alleged that People’s Trust letter had denied coverage for their loss,” and found the company had timely elected its right-to-repair option under the policy endorsement. The appeals court found the trial court should have granted People’s Trust’s repeated motions but “Instead, the trial court transformed the appraisal award into an award of money damages, which was not warranted under the particular facts and circumstances of this case,” the opinion stated.
“Contrary to the insureds’ suggestion, this provision does not authorize an insured, after People’s Trust has exercised its right-to-repair option, either to hire its own contractor to effectuate the repairs or to obtain a loss payment. Indeed, such a construction of the provision – viewed in isolation from the policy’s other operative provisions – would both (i) upend the insurer’s right-to-repair option and (ii) render meaningless the policy endorsement’s clear mandate that when People’s Trust exercises its right-to-repair option, such repair is in lieu of issuing any loss payment that would otherwise be due under the policy,” the opinion further stated.
The appeals court reversed the decision and instructed the trial court to require the Tosars comply with the policy’s repair endorsement.
LMA Newsletter of 1-3-22
