A Third District Court of Appeal ruling addressing recent updates to Florida's insurance law governing advance written notice could have far-reaching implications costing policyholders serious amounts of money, lawyers said.

At contention in the case was an appraisal that People's Trust Insurance Co. refused to rely upon in order to pay its policyholders a claim of around $172,000. Nakia, Maria, and Anthony Lavadie, the insureds, disputed the payout offered by People's Trust because they said a policy update did not adequately forewarn them of a policy change.

The Third DCA reversed orders granting partial summary judgment in favor of the insureds and remanded the case to the Miami-Dade Circuit Court. In its order, the Third DCA clarified that a change in Florida Statutes now required insurance companies to summarize changes in an insurance policy for contracts issued after 2018 and provide notice of those changes to their insureds. Policies issued in 2018 and earlier are not subject to this disclosure requirement.

Raoul Cantero, a partner at White & Case in Miami, said this ruling will apply to numerous claims arising from damages caused by hurricanes Wilma and Irma in the State of Florida, which are in the millions of dollars.

"Insureds thought that was an invalid notice in the change of policy terms because they didn't delineate every single change in the policy," Cantero said. "And the court clarified that you didn't have to delineate every single change. You just have to clarify to the insured that there was a policy change."

Cantero pointed to how the Florida Legislature in 2018 amended Florida Statutes sec. 627.43141. Included now is a requirement that the insurer must give the insured advance written notice summarizing a change in an insurance policy.

"You don't even need to summarize it pre 2018," Cantero said. "It's only after 2018 that you have to summarize the change."

Read the Third DCA opinion:

But in the lower court, the insureds prevailed when the Miami-Dade Circuit Court granted partial summary judgment.

The ruling stemmed from issuance of a new insurance policy by People's Trust for the insureds in 2014. When the policy was up for renewal, People's Trust sent the insureds a renewal package that had a "notice of change in policy terms."

The notice informed the insureds that there would be changes to the policy and encouraged the insureds to carefully review the changes because it stated: "Your policy, in its entirety, has changed."

An additional document, "Preferred Contractor Endorsement," started with, "THIS ENDORSEMENT CHANGES YOUR POLICY. PLEASE READ IT CAREFULLY," in bold. It said that, starting in March 2016, if People's Trust invoked its right to repair a covered loss claimed by the insureds, each side could demand an appraisal to resolve any failure to agree on the scope of repairs by Rapid Response Team, People's Trust's designated contractor.

A water leak lead to Timothy H. Crutchfield, a partner at Mintz Truppman in North Miami, claiming on behalf of the insureds that an estimate by People's Trust was "severely deficient," the Third DCA's opinion stated. Crutchfield refused to proceed with an appraisal and instead sought about $172,000 — over $100,000 more than the People's Trust estimate — within 10 days and threatened court intervention if the payment was not forthcoming within that time frame.  The $172,000 claim was based upon an estimate obtained from the insured's own contractor, and not People's Trust's designated contractor.

The Third DCA stated that the new policy term about submitting scope of work disputes to an appraisal process was valid, as was the notice of the insureds' right to participate in a mediation program once it was clear that a dispute had arisen. The appellate court also determined that People's Trust had provided adequate statutory notice of the change in its policy terms.

Cantero noted a takeaway from this case.

"When there is a claim," Cantero said, "mediate it first and go to appraisal to determine the amount of loss, and save the insured the time and expense for litigating these issues."