Florida Appellate Court Holds Insurer Does Not Waive Coverage Position By Invoking Appraisal

A Florida appellate court held that the trial court erred in entering final judgment enforcing an appraisal award that included damages excluded under the insureds’ policy. State Farm Fla. Ins. Co. v. Orlinda Gonzales and Harmodio Diaz, No. 2D20-1268, 46 Fla. L. Weekly D2168a, 2021 Fla. App. LEXIS 13541 (Fla. 2d DCA, Oct. 1, 2021).

The insureds reported a loss to their home as a result of a septic tank overflow. The insurer accepted coverage for the loss and invoked appraisal to determine the amount of the claim. The insureds filed suit for breach of contract. The appraisal panel made an award for “fungus-related damages” and additional living expenses. The policy, however, excluded coverage for “fungus (including mold)” through an endorsement, so the insurer did not pay the appraisal award.

The insureds filed a motion for judgment in accordance with the appraisal award, arguing that the award was covered under the policy as the fungus-related damages were a resulting loss from the septic tank overflow. Further, the insureds claimed that the insurer waived coverage defenses by invoking the appraisal process. The trial court affirmed the award, finding that the fungus-related damages were covered as a resulting loss, and entered judgment in favor of the insureds.  However, on appeal, the appellate court determined that the trial court erred by failing to apply the endorsement that excluded fungus-related damages and found that an insurer does not waive its right to assert coverage defenses by invoking the appraisal provision.