Courts proceed to be requested to referee disputes about how appraisal must be carried out, what an award should seem like, and if it ought to have line merchandise delineations of harm. A latest federal ruling out of Florida addressed simply such a battle between Nice Lakes Insurance coverage SE and Ming & Kwang Growth Company. 1
The case arose after Hurricane Ian broken industrial property in Naples. The insurer pushed for the appraisal panel to make use of its most popular “type” requiring separation of substitute value worth, precise money worth, direct and oblique damages, and any prices related to matching. The policyholder rejected that demand, insisting that the coverage itself accommodates no such requirement.
Nice Lakes made a number of arguments in help of its place. It urged the courtroom to learn the coverage “as a complete” and argued that as a result of the Loss Cost situation makes substitute value funds contingent upon precise restore, the award should get away RCV from ACV to stop untimely fee.
Nice Lakes then claimed that Florida case legislation helps line-item appraisal awards when courts have instructed panels to separate totally different classes of advantages, pointing to choices involving ordinance and legislation protection, particles removing, and different coverage parts.
The insurer’s most aggressive stance was on the difficulty of matching. Citing the owners matching statute, which explicitly applies solely to residential insurance policies, Nice Lakes argued that industrial insurance policies present no protection for matching. In its view, any try to fold matching into an appraisal award could be improper as a result of it could drive the insurer to pay one thing not owed underneath the coverage.
I might counsel that insurers permitting their insurance coverage protection attorneys to undertake a “win in any respect prices” mentality and argue towards matching of economic property, which has heretofore all the time been thought of throughout adjustment, be thought of dangerous religion. Hoping a decide will make a mistake and alter the best way an insurer and whole business adjusts claims definitely is an absence of fine religion. Good religion ought to apply throughout litigation.
The policyholder filed a superb authorized transient and countered that none of those arguments modified the basic appraisal provision within the contract, which stated nothing about line-itemization, timing, or matching carve-outs. Florida legislation is evident that courts can not rewrite contracts so as to add circumstances the insurer now needs it had drafted.
Circumstances throughout the Center and Southern Districts of Florida have rejected insurer makes an attempt to compel line-item awards absent express coverage textual content. The policyholder additionally emphasised that matching can nonetheless fall inside the protection grant, because the coverage insures towards “direct bodily lack of or injury to Lined Property” and requires repairs to be of “like variety and high quality.” Beneath that wording, a repaired property that’s clearly mismatched should be thought of broken. The shortage of a statute mandating matching in industrial insurance policies doesn’t logically result in the conclusion that matching is prohibited in these insurance policies.
The courtroom sided with the policyholder. It famous that Nice Lakes primarily conceded that the coverage’s plain language doesn’t require delineation of RCV, ACV, or matching. Whereas a line-item award might typically be useful, the courtroom defined, the actual query is whether or not it may be pressured on a celebration who objects. The reply, underneath Florida legislation, isn’t any.
Federal and state choices have persistently held that compelling itemization not discovered within the coverage would quantity to rewriting the contract. The courtroom distinguished the insurer’s authorities, declaring that in some instances the events had agreed to itemization, and in others the difficulty was not contested. None supported the concept an insurer can unilaterally impose its personal appraisal type.
On the essential difficulty of matching, the courtroom acknowledged that Florida’s statute applies to owners’ insurance coverage however rejected the insurer’s illogical leap that industrial insurance policies due to this fact should present zero matching. The absence of a statutory mandate doesn’t equate to a prohibition, and industrial insurance policies can nonetheless cowl matching when their language helps it.
There are a selection of classes for appraisers, umpires, and events to an insurance coverage dispute. First, appraisal is a contractual mechanism, and courts will implement it as written quite than including circumstances an insurer may discover handy.
Second, insurers can not use the dearth of a statutory matching requirement for industrial insurance policies to argue that such protection is categorically excluded. The insurer’s try to twist silence within the statute right into a broad prohibition illustrates how illogical arguments can undermine credibility. In the long run, the policyholder was entitled to an appraisal underneath the coverage’s precise phrases, not underneath the insurer’s redrafted model.
Lastly, I used to be impressed with the depth of analysis and arguments made by the policyholder’s counsel. The lesson is that attorneys make a distinction within the end result of instances. Policyholders ought to choose their counsel correctly and after a diligent search.
Fifteen years in the past, I wrote:
The development is evident–itemized appraisal awards are requested extra typically. Whether or not you suppose appraisal awards must be itemized or not, the whole controversy can depart one very unhappy with the whole appraisal expertise. 2
Superb how some debates haven’t modified over time.
Thought For The Day
“The final word measure of a person is just not the place he stands in moments of consolation and comfort, however the place he stands at occasions of problem and controversy.”
—Martin Luther King, Jr.
1 Nice Lakes Insurance coverage SE v. Ming & Kwang Dev’t Corp., No. 2:24-cv-00451(M.D. Fla. Sept. 2, 2025).
2 Chip Merlin, Requests for Itemized and Line By Line Appraisal Awards Develop into Extra Frequent, Prop. Ins. Protection Legislation Weblog (Oct. 28, 2010).