The Fourth District Court of Appeal recently reaffirmed under what scenario an insured may be entitled to fees under Florida Statute section 627.428 in a claims adjusting dispute. In Goldman v. USAA, 4D17-1098 (Fla. 4th DCA 2018), homeowners notified their insurer about a plumbing leak that damaged their home. USAA investigated the claim and issued payment. The homeowners filed suit for breach of contract without letting USAA know they disputed the insurance payment. USAA moved to compel appraisal and paid the amount of the subsequent appraisal award, which established the homeowners’ damages under the policy as a matter of law. As such, USAA moved for and was granted summary judgment on the breach of contract claim.
The homeowners argued that USAA incorrectly denied them benefits under the policy, and as such, were entitled to attorneys’ fees under 627.428. The appellate court disagreed and reiterated the circumstance where such fees would be appropriate. It explained: “It is only when the claims adjusting process breaks down and the parties are no longer working to resolve the claim within the contract, but are actually taking steps that breach the contract, that the insured may be entitled to an award of fees under section 627.428, Florida Statues.” The Court further stated, “[I]t is the incorrect denial of benefits that triggers an award of attorney’s fees under 627.428. . . . [T]he insured never gave the insurer the opportunity to incorrectly deny the benefits before filing a lawsuit.”
Goldman presents an example of how an insurer should adjust a claim. It investigated Plaintiff’s claim immediately upon notice of the same. It issued payment called for under the policy provisions. Once compelled to appraisal, it conducted appraisal and paid the award. There was no break down in the adjusting claims process, and USAA took no steps toward breaching the contract. The homeowners were not entitled to statutory fees.
We are seeing more and more claims where this type of scenario is occurring – where an insured simply files suit in an attempt to obtain attorney’s fees.
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