By Melissa McMillan Sims, Esq.
In February, the US District Court for the Southern District of Florida addressed the issue of an insured’s duty to comply with post-loss conditions even after a demand for appraisal is made.
In Treasure Cay Condominium Assoc. v Frontline Ins. Unltd. Co., Case no 4:19-10211-CV-King, the court determined that an insured must comply with its duties after loss even if a demand for appraisal was made before the insurer demanded compliance with the insurance policy’s duties.
Treasure Cay Condominium Association, located in Marathon, Florida, made a claim for damage to its property due to Hurricane Irma. During its inspection, Frontline noticed that the property was in the middle of a renovation when Hurricane Irma made landfall on September 10 2017 and that the windows and sliding glass doors had been installed recently as evidenced by the protective film on them. Frontline determined that there was coverage but the amount was less than the deductible.
Frontline had been waiting for Treasure Cay to provide its engineering report when in September 18, 2019, through its public adjuster, Treasure Cay provided a proof of loss in the amount of $3.2 million (predominately for the replacement of all the windows and sliding glass doors) and a demand for appraisal. In response, Frontline advised that the request for appraisal was premature, requested an examination under oath (EUO) with supporting documents and re-inspection of the property as per the terms of the policy. Treasure Cay refused to sit for an EUO, refused to provide additional supporting documents and refused a re-inspection of the property arguing that because Treasure Cay had invoked appraisal, it was not required to comply with the post-loss conditions. Treasure Cay filed an action for Declaratory Relief regarding its duties after loss and its rights to appraisal. Frontline denied the claim as a whole for failure to comply with post-loss conditions.
On summary judgment, the court held that the insurance policy gave Frontline the right to examine Treasure Cay’s representative under oath and to request supporting documents related to the loss. Treasure Cay did not cite to any case that supported its argument that once the insured invoked appraisal, its duties under the policy were vitiated. Finding that the demand for appraisal did not “pause compliance or relieve Plaintiff from its post-loss obligations under the insurance contract,” the court ruled that Treasure Cay had materially breached the policy and was not entitled to court-ordered appraisal. See Biscayne Cove condo Ass’n v QBE Ins. Corp., 971 F.Supp. 2d 1121 (S.D.Fla. 2013).
Melissa McMillan Sims is an attorney with Berk, Merchant & Sims, a Coral Gables law firm. Her practice includes Insurance Defense, Insurance Coverage Litigation, First-Party Insurance, and Insurance Bad Faith. She is also President of the Windstorm Insurance Network and a member of the Claims & Litigation Management Alliance. You can reach her at [email protected]
LMA Newsletter of 3-8-21