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Homeowners Insurance Attorneys Analyze When Claims for Separate Properties Listed on a Single Policy Are Considered a Series of Independent Claims for Appraisal Purposes

Our homeowners insurance attorneys Florida appraisal process can be an effective remedy for policyholders engaged in a dispute with their insurance company where the sole issue is the value of the property and/or amount of loss.  However, an insured cannot compel an insurer to submit to appraisal until issues regarding coverage have been resolved.  An interesting issue that arises when multiple buildings are listed under a single policy is whether the resolution of coverage issues regarding one or more of the buildings makes the entire claim “ripe,” which means ready for litigation (or the appraisal process).

A federal court decision applying Florida law ruled against the property owner under a commercial policy based on policy exclusions.  However, the most interesting aspect of the case dealt with the analysis of when multiple structures listed on a policy will be treated as independent claims rather than one comprehensive claim.  This decision is important for appraisal purposes.  If all of the buildings included in a policy are treated as a single property, the case becomes ripe for appraisal after all coverage issues are resolved related to one or more of the buildings.   By contrast, the court might treat each property as constituting a distinct and separate claim, which means appraisal does not become appropriate unless coverage issues involving all buildings are resolved.

In Pernas v. Scottsdale Insurance Company, a business owner obtained a commercial property insurance policy covering two separate commercial properties: (1) 221 N.W. 7th Avenue, Miami Florida (“221 N.W. 7th”); and (2) 211 N.W. 7th Avenue, Miami, Florida (“211 N.W. 7th”).  The properties were severely damaged by water after an accidental discharge of water when pipes cracked or burst.  The policy had an appraisal provision that provided in pertinent part:

“If we and you disagree on the value of the property or the amount of loss, either may make a written demand for an appraisal of the loss.  In this event, each party will select a competent and impartial appraiser ….”

The policy also included the following exclusion relied on by the insurer with respect to damage to the property at 211 N.W. 7th:

The insured duties in the event of loss include “tak[ing] all reasonable steps to protect the Covered Property from further damages” and “[c]ooperating … in the investigation or settlement of the claim.”

The policy also included an exclusion relied on by the insurance carrier for “wear and tear, long-term decay, and deterioration of building materials; settling, cracking shrinking or expansion of building materials; and faulty, inadequate or defective workmanship, repair and/or construction materials and or maintenance.”

The insurer conducted an inspection and concluded that the damage to 211 N.W. 7th was caused, at least in part, by water damage.  However, the insurance company denied coverage for damage to 221 N.W. 7th for the following reasons: (1) the damage fell under the ordinary “wear and tear” and “faulty workmanship” exceptions.  The insurer also contended the claim was denied as to 221 N.W. 7th because the insured failed to cooperate with the investigation of the claim and failed to take reasonable steps to prevent post-loss damage.

While the appellate court sided with the insurance company in finding these exclusions precluded coverage, the decision was without a detailed discussion of the facts underlying the denial of summary judgment.

The more interesting aspect of the decision was the court’s analysis of whether the properties constituted distinct claims as if they were under separate policies or a single large comprehensive claim.  The court initially observed that under Florida insurance law appraisal only becomes an option when the sole issues remaining pertain to evaluation of the amount of loss.  The insurance dispute does not become ripe for appraisal purposes until all coverage disputes have been resolved.

The insured contended that the two properties comprised a single comprehensive claim under the policy.  She further reasoned that if the loss was caused by a covered peril with regard to one of the buildings, such as water damage from a burst or cracked pipe, this determination of coverage applies to the entire claim.  The rationale for this approach according to the insured was that any other reading would mean that an insured would have to file distinct claims for each building, dwelling, adjacent structure, and personal property under a policy.

The appellate court sided with the insurance company in rejecting this approach to characterizing the claims as a single comprehensive claim.  The court found the insured’s position unconvincing even though both buildings were listed on the same policy and assigned the same claim number.  The court considered a prior decision that held hurricane damage to seven building under a single property insurance policy constituted the equivalent of seven independent covered claims.    Each of the seven properties was listed separately on the declarations page with distinct coverage, limits, and premiums, as opposed to assigning an aggregate value for the entire facility.  Because the policy was set up in a similar way in this case, the court found that the two claims were distinct, so the finding of coverage for one building did not mean coverage disputes had been resolved comprehensively for the entire claim.

This is an issue that property owners need to carefully consider when purchasing a policy.  Many homeowners have more than one structure or property under a policy.  Policyholders should read their policy carefully to determine how the insurer will handle a claim where a loss to some of the buildings or structures is covered, but coverage for other structures is denied.  This can impact the timing in terms of resolving your claim.  As indicated here, this issue also can impact when an insured can compel the appraisal process.  If you have questions about your homeowners policy, you should speak with an experienced Miami insurance claims lawyer.

Greenberg, Stone, & Urbano:  Seeking Maximum Recovery for Policyholders from Their Homeowners Insurance Company

Our Miami homeowners claim lawyers at Greenberg, Stone & Urbano will tenaciously pursue the full compensation our clients are entitled to under the law.  For over 130 collective years, our firm has assisted homeowners with damage claims across South Florida.  We seek to obtain compensation for your tangible and intangible damages.  Our skill and dedication have earned us an AV rating from Martindale-Hubbell and recognition as one of South Florida’s top firms by the Miami Herald.   Call us at (888) 499-9700 or (305) 595-2400 or visit our website to schedule your initial consultation.


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