A Florida insurance company may not invoke the appraisal clause of its insurance policy if it has not timely advised its insured of the right to mediate the dispute.  

In Sierra v. Citizen’s Property Insurance Company, a case decided by the district Court in Miami-Dade County (Case No. 06-22196CA-20), the insured sent correspondence to its Florida insurance company alleging insufficient monies were paid to the insured and/or the estimates generated by the insurance company did not adequately compensate the insured for damages sustained in Hurricane Wilma. 

The insurance company failed to appropriately respond to the correspondence, and the insured filed suit.  The Florida insurance company filed a motion to dismiss the lawsuit or, in the alternative, a motion to abate the lawsuit on the grounds it wanted to engage in the appraisal process pursuant to the homeowner’s insurance policy.

The trial court denied the insurance company’s motion to dismiss or abate, stating that as a result of the insurance company’s failure to advise its insured of the right to mediate the dispute under Section 627.7015, Fla. Stat., the insurance company waived its right to appraisal.

The court determined the insured’s correspondence to the insurance company put the insurer on notice that there was a dispute as to the money paid for the hurricane damage.  Section 627.7015, Fla. Stat., entitled Alternative Procedure for Resolution of Disputed Property Insurance Claims, establishes a mediation program to help insureds resolve their claims disputes with insurers. Section 627.7015(2) Fla. Stat. provides: "At the time a first-party claim within the scope of this section is filed, the insurer shall notify all first-party claimants of their right to participate in the mediation program under this section."

The trial court noted that Florida Administrative Code Section 69J-2.003(3)(a) actually implements the statute by setting forth a mediation procedure which requires the insurance company to provide the insured: "notice of the right to mediate disputed claims to the insured within 5 days of the time the insured or the Department notifies an insurer of a dispute regarding the insured’s claim."

The trial court found that the insurance company did not notify the insured of her right to participate in the mediation program under 627.7015, and therefor waived its right to appraisal under subsection (7), which provides:

"If the insurer fails to comply with subsection (2) by failing to notify a first-party claimant of its right to participate in the mediation program under this section or if the insurer requests the mediation, and the mediation results are rejected by either party, the insured shall not be required to submit to or participate in any contractual loss appraisal process of the property loss damage as a precondition to legal action for breach of contract against the insurer for its failure to pay the policyholder’s claims covered by the policy."