The day before Thanksgiving last week, the Florida Third District Court of Appeal issued a non-final opinion in the case of Citizens Property Ins. Corp. v. Galeria Villas Condo. Ass’n, No. 3D10-807, 2010 WL 4740049 (Fla. 3d DCA Nov. 24, 2010).

Galeria Villas Condominium Association suffered a loss to its property from Hurricane Wilma in 2005. The association made a claim with its property insurer, Citizens, which estimated the damage to be below the association’s deductible. The association hired a public adjuster, who estimated the damage as being above the deductible. Based on the difference in the damage estimates, the association requested appraisal of the loss in May 2009. Citizens acknowledged the appraisal request, but responded with requests of its own, for a sworn proof of loss, property inspections, and several categories of documents, before it would agree to appraisal. Galeria provided the sworn proof of loss, but objected to property inspection and document requests. Specifically, Galeria refused to turn over the Declarations of Condominium, Condominium Bylaws, association board meeting minutes, and property management contracts. Before Citizens had an opportunity to investigate the dispute, the association filed a lawsuit. The circuit court ordered the parties into appraisal, and Citizens appealed.

Citizens raised three major issues: (1) inadequacies in the sworn proof of loss, (2) inability to inspect, and (3) lack of documentation.

Sworn Proof of Loss
Interestingly enough, the court practically ignored Citizens’ argument that the sworn proof of loss was inadequate. The court noted Citizens’ complaints with respect to the proof, but the court did not even bother to entertain the argument that inadequacies in the sworn proof of loss amounted to a failure to satisfy that policy condition.

The court did take issue with the association’s refusal to allow inspections by Citizens. The association had apparently refused to allow Citizens’ “loss consultant” the opportunity to inspect, demanding that Citizens send an “adjuster” instead. The court stated that the insurance policy requires the insured to allow the insurer the opportunity to inspect, and noted that an insurer acts through its agents, regardless of their title.

The court also took issue with Galeria’s objections to producing the Declarations of Condominium, Bylaws, meeting minutes, and property management contracts. Galeria objected to producing these documents on relevance (and other) grounds, claiming that they had nothing to do with the insurance claim. The court explained that these documents are relevant to an insurance claim because they often include insurance information, damage information, and maintenance records.

After its analysis on the arguments, the court issued its holding and administered a swift rebuke to both the condominium association and insurance company:

Until these conditions are met and the insurer has a reasonable opportunity to investigate and adjust the claim, there is no “disagreement” (for purposes of the appraisal provision in the policy) regarding the value of the property or the amount of loss. Only when there is a “real difference in fact, arising out of an actual and honest effort to reach an agreement between the insured and the insurer,” is an appraisal warranted. We therefore reverse the order compelling appraisal and remand for what we anticipate will be complete and immediate cooperation by Galeria in affording access to the property and the remaining records, and a prompt response to the claim by Citizens after its prompt investigation.6

6 The emphasis on prompt action after remand, as opposed to petulance or foot-dragging, is directed to both parties. Insurance claims are not like fine wines; they do not become better with time.

The message is clear: Condominium associations must cooperate with insurance company requests, and insurance companies must promptly investigate and make a decision on the claim.

It is important to note that a motion for rehearing was timely filed, and this opinion is not final until the court has acted on that motion, so this decision could change before final publication.

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