Option to Repair Provision Held Valid and Enforceable

Apr 30, 2021

Florida Insurance Matters is a monthly update on Florida insurance-related legal developments by the Colodny Fass Insurance Litigation Practice, recently recognized as the Insurance Litigation Department of the Year in South Florida by the Daily Business Review.


Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on representing insurance companies in complex insurance litigation and counseling insurers on claims resolution. She has represented insurers in connection with property damage and first-party coverage litigation, claims of “bad faith,” high-risk exposures, class actions and multi-district litigation.

For more information about Ms. Koltnow, click here.


Option to Repair Provision Held Valid and Enforceable  

After the homeowner filed a claim for water damage, the insurer accepted coverage for the loss and invoked its option under the policy to repair the damage. The homeowner refused to sign an authorization form allowing the repairs and did not pay the deductible. The insurer filed suit seeking specific performance of the policy, or a finding that the insured materially breached the policy by failing to allow repairs. The trial court granted summary judgment in the insurer’s favor, upholding an insurer’s right to repair damages, and held the homeowner materially breached the contract. On appeal, the homeowner argued the repair option violated Florida Statute 627.7011 which obligates an insurer to initially may at least the actual cash value of the loss. The statute acknowledged an insurer’s right to repair in compliance with the policy “and” 627.702, which governs total losses. The homeowner argued the insurer only has the option to repair if the property is a total loss. The appellate court rejected this interpretation as leading to an absurd result and construed the use of the word “and” to actually mean “or”. The court held the policy’s option to repair provision is enforceable and entirely consistent with Florida Statutes and allows an insurer to exercise a right to repair damaged property in partial losses. The court also held the homeowner’s refusal to sign the work authorization and to pay the required deductible constituted a total breach of the policy’s option to repair. Castro v. People’s Trust Ins. Co. (4th DCA, April 28, 2021)


  • The court recognized that an election-to-repair endorsement has been an established option for various Florida residential insurance policy forms for years. 
  • This case is a good example of the insurer documenting the homeowner’s refusal to comply with the policy provisions—the insurer made 4 separate attempts to obtain the executed work authorization form.

Appellate Court Certifies Conflict Over Compelling Appraisal When Coverage Disputes Exist

Condominium association made a damage claim following Hurricane Irma. The insurer adjusted the loss under $2 million, and paid the claim, less the deductible. The association later submitted a sworn proof of loss for $28 million. The insurer determined the claim was grossly inflated and an intentional misrepresentation, deemed the policy void, and denied coverage for the claim as a whole based on fraud. The association filed suit and sought to compel appraisal. The insurer opposed appraisal and argued the association forfeited its right to appraisal. The association argued the issue was one of the “scope of loss” for the appraisal panel. The trial court declined to compel appraisal and held the issue of coverage must be determined before the appraisal provision will apply. The appellate court reversed and held the insurer cannot avoid appraisal by claiming the insured fraudulently overinflated its claim after previously admitting coverage. The court acknowledged the Third District followed a “dual-track approach” while the Fourth District held the trial court must always resolve coverage disputes prior to compelling appraisal. This appellate court (Second District) remanded for the trial court to exercise its discretion as to whether the appeal will go forward on a dual track basis and certified conflict with the Fourth District cases. Villagio at Estero Condo. Assn., Inc. v. American Capital Assurance Corp. (2d DCA, April 16, 2021)


  • The Second District previously certified conflict with the Fourth District over this appraisal issue and the Florida Supreme Court accepted review earlier this year. This issue is one to watch!