Analysis and Interpretation by  Michael A. Cassel

On April 17, 2019, the Third District Court of Appeals released their decision in Safepoint Insurance Company v. Daisy Sousa (hereinafter " Sousa").  The Sousa opinion discusses the requirement of compliance with post-loss conditions, namely the request for a Sworn Proof of Loss (hereinafter “SPOL”), prior to the ripeness of appraisal.

Background and Facts

In 2017, as with many other Floridians, the insured sustained a loss to her property as a result of Hurricane Irma.  Two days later, the insured, through her public adjuster, reported the loss to Safepoint.  In turn, Safepoint inspected the property and, as part of their adjustment, requested that the insured provide an SPOL within 60 days of the request.  When the SPOL was not timely provided, Safepoint requested that the insured submit to an Examination Under Oath (hereinafter “EUO”) along with a request for documents, including a follow-up request for the SPOL. 

The EUO took place at the end of November 2017 but the insured still had not submitted the requested SPOL.  After the EUO, Safepoint sent two other requests for the SPOL in January 2018 and another in February 2018.  Despite not having received the requested SPOL, Safepoint issued payment in the amount of $47,838.64.  The insured then filed a lawsuit alleging breach of contract.  At the time the suit was filed, the insured had never presented so much as her estimate of damages.

During the early stages of litigation, the insured filed a motion to compel appraisal.  The lower court granted their motion and order the claim to the appraisal process.  The appeal followed based on the ability to challenge non-final orders compelling appraisal. 

3d DCA Opinion

The 3d DCA found that “appraisal and suit are premature when the Insured has failed to comply with a residential insurance policy's post-loss conditions.” [1]​  Additionally, the DCA held that “[t]he Insured's generalized description of loss at her EUO does not constitute a ‘sworn proof of loss' in compliance with the Policy, and the Insured has offered no reason for the failure to submit the public adjuster's itemized claim report before, rather than after, the EUO and lawsuit.” [2]  As such, the order compelling appraisal was reversed and vacated. 

Analysis, Impact, and Effect

Appraisal is a method of alternative dispute resolution which is generally favored by the courts in South Florida as it grants relief from the large number of first party cases which are filed.  In the event of a dispute, insurance policies will generally allow one of the parties to invoke appraisal or, alternatively, mandate that the parties must come to an agreement before appraising the claim.  Even though the courts are quick to send a claim to appraisal, there are a number of reasons that a court cannot (or should not) compel appraisal. 

As highlighted by the Sousa court, appraisal is not ripe until the insured has complied with the post-loss conditions outlined by the insurance policy. [3]  Insurance policies contain two (2) general types of post-loss conditions: "compulsory" conditions, i. e., conditions that must be fulfilled with or without the request from an insurer, [4] and "cooperation" conditions, i. e., conditions that must be fulfilled upon the request of an insurer. [5]  In most residential homeowners insurance policies, an SPOL need only be presented upon request and, as such, should be treated as a "cooperation" post-loss condition. [6] 

“In a breach of cooperation clause case… the insurer must show a material failure to cooperate which substantially prejudiced the insurer.” [7]  “Not every failure to cooperate will release the insurance company.  Only that failure which constitutes a material breach and substantially prejudices the rights of the insurer in defense of the cause will release the insurer of its obligation to pay.” [8]  With that said, Florida courts have routinely found that a “[p]roof of loss is a condition precedent to an insured's suit against an insurer” and, as such, must be presented prior to suit when same is requested or else the insureds runs the risk of having their case summarily dismissed. [9]  As such, when compliance with the request for an SPOL is particularly important as the failure to provide same could prove fatal to a claim.  Similar to Sousa, it is fairly standard that an SPOL must be provided within 60 days of any request issued.  The production of an SPOL beyond 60 days of the request may not necessarily be considered a breach of the cooperation condition as long as the insurer was not prejudiced as a result of the delay. [10] 

Furthermore, neither an insured nor insurer can compel appraisal when they have acted in a manner inconsistent with the appraisal process. [11]  This situation usually arises when an insurance carrier deciding to go to appraisal during the course of litigation; however, as the insured in Sousa filed a lawsuit before invoking appraisal, it could be argued that the insured waived their ability to go to appraisal.   

Frankly, there is precedent which stands for the proposition that appraisal is not warranted until “there is a ‘real difference in fact, arising out of an actual and honest effort to reach an agreement between the insured and the insurer.'” [12]  This begs the question as to whether the carrier may simply invoke appraisal as a matter of course after their initial adjustment without so much as attempting to investigate a supplemental claim or even waiting for an estimate from the insured.  In any event, the insured should, at a minimum, provide an estimate evidencing a discrepancy before appraisal can be invoked. [13]  As it does not appear as though the insured in Sousa provided such an estimate prior to filing suit or even invoking appraisal, this could have formed the basis of another argument towards dismissing the lawsuit as premature. [14]  

Hypothetically speaking, in the event an estimate is presented prior to the payment of a lower undisputed coverage amount, there is an argument that the insurer breached the insurance contract as a result of it knowingly underpaying the claim.  In the event of such a breach of contract, an insured is no longer required to comply with conditions contained within the policy of insurance. [15]  

It is extremely important to note that, and as outlined in my prior post, even if an insurance carrier rejects the amount of the SPOL or denies a claim based on an excluded cause of loss, appraisal is a proper manner to determine the value of the claim and cannot be rejected.  Florida courts, including the Supreme Court, have consistently stated that “where an insurer has not wholly denied coverage, causation is an amount of loss issue for appraisal.” [16] This means, in a situation such as Sousa, where the carrier has opened coverage, appraisal is proper method with which to resolve a claim as long as there has been compliance with all pending post-loss conditions. 

In light of situations such as those in Sousa, we strive to steer our clients down the path of least resistance.  Even though it may seem like the insurance carrier is simply trying to make an insured jump through hoops, it is often much easier to comply with the carrier's requests than it is to litigate over compliance with post-loss conditions or, to that end, fight against a court looking to dismiss the case.  Should you have any questions about how this analysis may relate to your own claim,  please do not hesitate to contact us for a free consultation.​

[1] Safepoint Ins. Co. v. Sousa, 3D18-1842, 2019 WL 1646100, at *2 (Fla. 3d DCA 2019)

[2] Id.

[3] Id.

[4] Rodrigo v. State Farm Fla. Ins. Co., 144 So. 3d 690, 692 (Fla. 4th DCA 2014)

[5] See generally State Farm Mut. Auto. Ins. Co. v. Curran, 135 So. 3d 1071, 1072 (Fla. 2014) 

[6] Typically, flood policies and some commercial policies mandate that an SPOL be provided without the need for the carrier to have requested same.

[7] Macias at 1218

[8] Ramos v. Nw. Mut. Ins. Co., 336 So. 2d 71, 75 (Fla. 1976)

[9] Rodrigo v. State Farm Fla. Ins. Co., 144 So. 3d 690, 692 (Fla. 4th DCA 2014); see also Soronson v. State Farm Fla. Ins. Co., 96 So. 3d 949, 952 (Fla. 4th DCA 2012) and Kramer v. State Farm Fla. Ins. Co., 95 So. 3d 303, 306 (Fla. 4th DCA 2012).

[10] Haiman v. Fed. Ins. Co., 798 So. 2d 811, 812 (Fla. 4th DCA 2001) quoting Diamonds & Denims, Inc. v. First of Georgia Ins. Co., 417 S.E.2d 440, 441–42 (Ga.Ct.App.1992)).

[11] See Florida Ins. Guar. Ass'n, Inc. v. Martucci, 152 So.3d 759 (Fla. 5th DCA 2014); Fla. Ins. Guar. Ass'n v. Maroulis, 153 So.3d 298 (Fla. 5th DCA Oct. 17, 2014); Fla. Ins. Guar. Ass'n v. Branco, 148 So.3d 488 (Fla. 5th DCA 2014).

[12] Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass'n, Inc., 48 So. 3d 188, 191 (Fla. 3d DCA 2010) quoting U.S. Fid. & Guar. Co. v. Romay, 744 So. 2d 467, 470 (Fla. 3d DCA 1999) citing to 14 Couch on Insurance 2d § 50:56 (1982).

[13] See, generally, Francis v. Tower Hill, 224 So. 3d 259 (Fla. 3d DCA 2017); Siegel v. Tower Hill 225 So. 3d 974, 977 (Fla. 3d DCA 2017)

[14] It has been held that payments not marked full and final are considered performance under an insurance policy and not a breach of contract.  See Rizo v. State Farm Fla. Ins. Co., 133 So. 3d 1114 (Fla. 3d DCA 2014).  See also Quiroz v. Tower Hill Select Ins. Co., 2015 Fla. App. LEXIS 17898 (Fla. 4th DCA November 25, 2015) citing Slayton v. Universal Prop. & Cas. Ins. Co., 103 So. 3d 934 (Fla. 5th DCA 2012); Luciano v. United Prop. & Cas. Ins. Co., 156 So. 3d 1108 (Fla. 4th DCA 2015); Linares v. Universal Prop. & Cas. Ins. Co., 141 So. 3d 719 (Fla. 3d DCA 2014).

[15] Castro v. Homeowners Choice Property & Casualty Insurance Company, 228 So. 3d 596 (3d DCA 2017); Fabel v. Masterson, 951 So. 2d 934, 935 (Fla. 4th DCA 2007); Tower Hill Select Ins. Co. v. McKee; Indian River State Bank v. Hartford Fire Ins. Co., 46 Fla. 283, 35 So. 228, 246 (Fla. 1903); Hartford Accident & Indem. Co. v. Phelps, 294 So. 2d 362, 365 (Fla. 1st DCA 1974). 

[16] Johnson v. Nationwide Mutual Insurance Co., 828 So.2d 1021 (Fla. 2002), People's Tr. Ins. Co. v. Garcia, 263 So. 3d 231, 234 (Fla. 3d DCA 2019)