Florida Statute sec. 627.7015 sets out a mediation requirement that insurers must offer to policyholders for disputed property insurance claims under personal lines and commercial residential policies that must take place before the appraisal process has started or before any lawsuits have been filed. As most of these types of policies require participation in an adversarial appraisal process, this law is designed to assist policyholders by providing with them an informal, unintimidating forum to resolve these disputes before they reach the expensive, protracted adversarial appraisal process stage.
How does the policyholder find out about this right?
The insurance company is required to notify the policyholder of his or her right to participate in the mediation program when the claim, called a first-party claim – a claim against one’s own insurance company – is filed.
Once the policyholder is aware of the mediation option, who requests it?
The policyholder or the insurance company may request mediation. The policyholder may bring their attorney, if they have one, to participate.
Can either side back out if an agreement is reached?
If the parties reach a written settlement, the policyholder has 3 business days to rescind the agreement. However, if the policyholder has deposited or cashed monies given by the insurance company as a result of the agreement reached at mediation, the policyholder may not rescind the agreement. If an agreement is reached with no rescission, it binds both parties and serves to release all claims presented at the mediation.
To whom doesn’t this section apply?
This section does not apply to the following types of claims: commercial coverages, private passenger motor vehicle insurance coverages, or disputes relating to liability coverages in policies of property insurance.
To what disputes doesn’t this section apply?
This section doesn’t apply to disputes where insurer has a reasonable basis to suspect fraud, or where, based on agreed-upon facts as to what caused the loss, there is no coverage under the policy. It also doesn’t apply where the insurer reasonably believes that the policyholder has intentionally misrepresented material facts relevant to the claim and the insurance company has denied the whole request for payment based on that material misrepresentation. Also, if the amount in controversy is less than $500 (unless the parties agree otherwise), or with respect to a windstorm or hurricane loss that does not comply with s. 627.70132, this section doesn’t apply.
What consequences do the insurance companies face for failing to comply with this section?
If an insurer does not notify a policyholder of his or her mediation rights pursuant to this law, or if the insurer requests the mediation and the mediation results are rejected by either party, the policyholder does obtain a benefit: he or she is not required to participate in any appraisal process of the property damage (as a condition or requirement before filing a breach of contract suit against the insurance company for its failure to pay the policyholder’s claims.) Since, as discussed above, the appraisal process can be expensive and lengthy, the insurance companies have a definite incentive to make sure they comply with this law so that the policyholder isn’t able to avoid this step.
Florida law is designed to ensure policyholders are treated fairly and mediation may be one way to efficiently resolve your claim. If you are involved in an insurance dispute, consult an attorney to determine whether you may be entitled to compensation and to ensure that your insurance company has played by the rules.