Florida Appellate Court Holds Insurer’s Invocation of Appraisal During Cure Period Does Not Cure Bad Faith Claim If Payment Is Made After Cure Period Expires

A Florida appellate court held that the sixty-day cure period of a Civil Remedy Notice of Insurer Violations (CRN) is not tolled when an insurer invokes appraisal within the period and timely pays the appraisal award pursuant to policy terms if payment is made after the cure period expires. Zaleski v. State Farm Fla. Ins. Co., 46 Fla. L. Weekly D416b (Fla. 4th DCA February 24, 2021).

The insureds filed a claim under a homeowners’ policy for damage from a burst water supply line. The insurer investigated the claim, determined the amount of loss, and tendered an undisputed payment. The insureds filed a CRN, alleged that the insurer failed to comply with loss settlement provision, and asserted that the insurer could cure the CRN “by issuing a payment for all contractual damages owed.” The insured provided a detailed estimate of repairs, and the insurer invoked the appraisal provision of the policy within the sixty-day cure period for the CRN. When the appraisal award was entered, the insurer timely paid the award pursuant to the policy terms. The insureds then filed a bad faith suit against the insurer. The insurer moved for summary judgment and argued that it had cured the CRN by invoking appraisal within the cure period and paying the appraisal award timely pursuant to the policy terms. The trial court granted the summary judgment in favor of the insurer.

The appellate court reversed, holding that even when the parties do not agree on the amount of loss, appraisal is not a condition precedent to make a payment and therefore cannot toll the CRN cure period. Additionally, it held that the CRN statute does not allow for appraisal to toll the cure period as that would allow insurers to continue to cause delay or otherwise act in bad faith while escaping liability. The case was remanded for further proceedings so the insureds could pursue their bad-faith action.