When The Appraisal Says One Thing, But The Policy Says Another: A Florida Insurance Case Study – Insurance Laws and Products – Insurance

In a recent decision by the U.S. District Court for the Middle
District of Florida, Wood v. GeoVera Specialty Insurance
Company (2024 WL 3952571), the court affirmed that unambiguous
policy limits remain enforceable even when an appraisal award
exceeds those limits. This decision provides valuable guidance for
insurers handling post-catastrophe claims.

In Wood, the insureds, Nancy and John Wood, filed a
claim to their insurer, GeoVera Specialty Insurance Company, for
property damage following Hurricane Ian. Unable to reach an
agreement on the amount of the loss, the parties agreed to take
their dispute to appraisal. The appraisal award exceeded the policy
limits for certain items. Accordingly, GeoVera paid the policy
limits, but refused to pay amounts in excess of the policy limits
despite the appraisal award. The Woods then sued GeoVera arguing
that it underpaid them. In doing so, the Woods sought the full
amount of the appraisal award, which, as noted, exceeded the policy
limits. Both parties filed motions for summary judgment. The court
ruled in part for GeoVera, upholding the enforceability of the
policy limits, but denied summary judgment on other issues, such as
whether the full amount owed for the roof was paid and whether
interior damage was caused by wind or water, necessitating a
trial.

What Was Damaged (And Why It Matters)

The court’s ruling hinged on how the policy limits applied
to different areas of damage, which illustrates the challenges in
interpreting policy language after appraisals. Here’s how the
court broke it down:

1. The Pool Enclosure

• Appraisers’ Value: $12,695




• Policy Limit: $5,000

Despite the appraisers’ higher valuation, the court upheld
GeoVera’s payment of $5,000, as this was the maximum allowed
under the policy. The court confirmed that insurers are not
obligated to pay more than the stated limit, even if the damage
exceeds that amount.

2. The Roof

• Appraisers’ Value: $21,082




• Policy Coverage: The policy only covered 20% of the replacement
  cost for roofs that were 24 years old or older, capped at
  $10,000.

GeoVera initially sent the Woods a “coverage letter”
stating that they had determined the total roof loss to be
$15,338.87 and, based on the 20% coverage for old roofs, tendered
$3,067.77 (20% of $15,338.87). However, the insureds requested an
appraisal, and the appraisers later valued the roof damage higher,
at $21,082.52. As a result, GeoVera was required to apply the 20%
policy limit to the appraised amount, meaning they should have paid
$4,216 (20% of $21,082.52), not the $3,067.77 they initially
tendered based on their own assessment. Since GeoVera failed to
show that it paid the correct amount—20% of the appraised
loss—its motion for summary judgment regarding the roof
payment was denied.

3. The Interior

• Appraisers’ Value: $52,282




• Policy Coverage: The policy limited water damage coverage to
  $10,000 under the water damage endorsement, but there was no
  specific limit for wind damage

The court determined that it was unclear whether the appraisal
panel determined that the interior damage was caused by water or
wind. Since the policy had a much lower limit for water damage, a
trial was needed to resolve whether the damage was primarily caused
by wind or water (which was capped at $10,000).

Takeaway

This case highlights the limits of appraisals. While appraisers
determine the extent of loss, questions of coverage—such as
whether a specific loss is covered under a policy or the
application of policy limits—remain judicial matters.
Insurers may apply policy terms and limits to appraisal awards, as
GeoVera did, and courts must resolve coverage disputes when parties
disagree on policy interpretation.

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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.