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Florida Appellate Court Approves Of Insurer’s Right-to-Repair In Lieu Of Payment Clause

March 4, 2022

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<p style="text-align: justify;">People’s Trust Insurance Company takes an unorthodox approach to homeowner’s insurance, “In return for a premium discount, the [] policy contain[s] a Preferred Contractor Endorsement” which gives “People's Trust a right-to-repair option, i.e., after inspecting a covered loss, People's Trust ha[s] the option to select its own contractor [and] to repair the damages to the insureds’ property in lieu of issuing a loss payment that would otherwise be due under the policy.” See, <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/03/Peoples-1.pdf">People's</a> Trust Insurance Co. v Tosar</em>, 46 Fla. L. Weekly D 2651, 2021 Fla. App. LEXIS 15605, 2021 WL 5912737 (Fla. 3d DCA December 15, 2021).</p>
<p style="text-align: justify;">After their home was damaged by Hurricane Irma, the insureds’, Mr. &amp; Ms. Tosar made a claim. Peoples Trust did not dispute coverage and, after timely inspection, elected to repair all covered damage exceeding the policy’s deductible. The insureds challenged Peoples Choice’s estimate, and Peoples Trust triggered the policy’s appraisal clause. Instead of proceeding with the appraisal, the insureds sued.</p>
<p style="text-align: justify;">Peoples Trust asked for, and the court compelled appraisal. The appraisal award exceeded Peoples Trust’s initial estimate and, pursuant to its policy, Peoples Trust asked the court to require the insureds to authorize it to make the required repairs. After the court declined to do so, the insureds asked the court to order Peoples Trust to pay them the appraisal award. The trial court ordered Peoples Trust to pay the appraisal amount less the deductible, and Peoples Trust appealed.</p>
<p style="text-align: justify;">The appellate court found that the policy was not ambiguous and that that appraisal award simply established the scope of the repairs to be performed “in lieu of a loss payment.” The appellate court found the policy’s “right-to-repair option” valid and enforceable, and ordered the trial court to enforce the policy as written.</p>
<p style="text-align: justify;">Florida is in the midst of an insurance crisis. Homeowners’ insurance generally, and windstorm coverage in particular, is hard to find and expensive. In reaching its decision, the appellate court signaled that Florida’s courts will enforce creative policies, that lower insurance costs, so long as the policy unambiguously explains the nature and scope of the insurance provided.</p>
<p style="text-align: justify;">Thanks to Charles “Chip” George for his contribution to this post. Please contact <a href="mailto:Cgeorge@wcmlaw.com">Chip</a> with any questions</p>

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