Florida’s 1st District Court of Appeal recently had the opportunity to address a unique situation pitting the requirements of Florida’s Valued Policy law against a property insurance policy’s appraisal provision.  InFreeman v. American Integrity, Ins. Co. of Fla., 2015 Fla. App. LEXIS 18553 (Fla. 1st DCA 2015) the insureds purchased a dwelling property policy for their mobile home.  The insureds reported a loss caused by burglary and vandalism that occurred while the policy was in effect.  The insureds further submitted a proof of loss contending that Florida’s Valued Policy Law applied to the loss.  The policy’s Coverage A – Dwelling limit was $88,640.

Florida’s Valued Policy Law, Section 627.702(2008) provided the following:

(1)(a)  In the event of the total loss of any building, structure, mobile home as defined in section 320.01(2), or manufactured building as defined in section 553.36(13), located in this state and insured by any insurer as to a covered peril, in the absence of any change increasing the risk without the insurer’s consent and in the absence of fraudulent or criminal fault on the part of the insured or one acting in her or his behalf, the insurer’s liability under the policy for such total loss, if caused by a covered peril, shall be in the amount of money for which such property was so insured as specified in the policy and for which a premium has been charged and paid.

However, the policy also included an appraisal provision, which stated in part: “If you and we fail to agree on the amount of loss, either may: . . . Demand an appraisal of the loss.”  In response to the claim, the insurer invoked appraisal.   In response, the insureds filed suit and the court ultimately abated the litigation and compelled appraisal.

The appraisal process resulted in a report, apparently agreed to by the umpire and both parties’ respective appraisers, that the mobile home was a total loss.  In addition, the appraisal panel concluded that the reasonable cash value of the mobile home was $46,496.88.

The insurer then issued payment of $45,496.88 after applying the deductible and moved for “summary judgment on the ground that no dispute of law or fact existed about the inapplicability of FVPL; that the amount of insurance proceeds payable under the Policy was established at $46,496.88 by the appraisal process that was provided for by the Policy and ordered by the court; and that [the insurer] fulfilled its obligation by issuing payment of $45,496.88.”  In addition, the insurer “argued in part that the appraisal provision of the Policy and the trial court’s order compelling appraisal made FVPL inapplicable as a matter of law, that the appraisal process set the amount of loss recoverable and the approval provision of the Policy took precedence over the application of FVPL. . .”  The trial court entered summary judgment in favor of the insurer and the insureds appealed to the 1st District Court of Appeal.
On appeal, the 1st District Court found reversed the trial court’s summary judgment and remanded to the trial court finding: (1) “that the Policy’s appraisal provision and the appraisal panel’s award did not preclude the applicability of FVPL; and (2) that a material issue of fact existed regarding whether the mobile home was in fact a total loss, thereby precluding entry of summary judgment.

In reaching its conclusion, the Court relied in part onFlorida Farm Bureau v. Cox, 943 So. 2d 823, 832-33 (Fla. 1st DCA 2006) wherein the court found that “’insurance policies are deemed to incorporate applicable statutes, and conflicting policy provisions must give way’ and that ‘[t]he VPL controls even when it conflicts with provisions of the insurance policy.’”  In addition, the Court reference d 15 Couch on Ins. Section 210:42 “As a general rule, the sole purpose of an appraisal is to determine the amount of damage.  As a consequence, an appraisal clause does not permit appraisers to determine whether a loss was, in fact, total.”

Ultimately, it is not for an appraisal panel to determine whether a given loss is in fact a total loss.  Under the circumstances of this case the insureds never had the opportunity to attempt to prove that they were entitled to the full Coverage A limits per the Valued Policy Law.  Though it remains to be seen as to whether the insureds can actually prove that the mobile home was actually a total loss.