Florida Middle District Court Denies Insured’s Motion to Compel Appraisal in Hurricane Ian Breach-of-Insurance-Contract Case

By Kelly M. Vogt

In Arroyave v. First Cmty. Ins. Co., Case No. 2:23-cv-1064-JLB-NPM, 2024 U.S. Dist. LEXIS 15328 (Fla. M.D. Jan. 29, 2024), the U.S. District Court for the Middle District of Florida, Fort Myers Division, denied an insured’s motion to compel appraisal in a breach-of-insurance-contract case arising from property damage after Hurricane Ian, finding neither party could request appraisal due to a dispute as to the scope of items damaged by the flood.

The insured had a SFIP (standard flood insurance policy) with the carrier. The appraisal provision in the SFIP states: “If you and we fail to agree on the actual cash value or, if applicable, replacement cost of your damaged property to settle upon the amount of loss, then either may demand an appraisal of the loss.” 

In addition to the above-cited language, the SFIP contains the following language: “The appraisal clause can only be invoked when the parties cannot agree as to the actual cash value, or, as defined by the policy, the parties cannot agree as to the replacement cost of an insured item of property. This language cannot be stretched to mean that appraisal can be invoked whenever the parties dispute which items of property were damaged or whether those items were in fact damaged by flood waters.”

The insurer in the case, First Community Insurance Company, determined that flood water did not enter the interior of the insured’s building, but paid the insurer certain allowances. The insured disputed the coverage and submitted an estimate including items that First Community found undamaged by the flood or not damaged at all. The insured, therefore, filed a motion to compel appraisal.

In denying the motion to compel, the Court explained, “[i]n other words, the appraisal provision in a federally regulated flood insurance policy can be invoked only when the parties dispute the valuation of a loss, and it cannot be invoked when there is a dispute about what was damaged by the covered peril.” 

As there remained an unresolved issue about the scope of damaged items attributable to the flood, the Court held that neither party could invoke the appraisal clause.