Recent Case- Can Insurer Deduct for Depreciation?

Recent  Case on Appraisal Award Form & Substance

Sunshine State Insurance Co. v. Davide, Fla: Dist. Court of Appeals, 3rd Dist. 2013

Anthony L. Davide (“Davide”) filed a Katrina claim pursuant to his insurance policy with Sunshine State Insurance, for wind damage.  A dispute arose as to reasonable estimated costs of repair, depreciation, etc. The matter went to appraisal with an appraisal award  rendered by the IA and the neutral Umpire selected by both parties.  Sunshine claimed it was unsure whether the amount awarded had already taken into account “deductions for depreciation”, or whether Sunshine was to deduct the depreciation from the amount awarded.  Having not received clarification from the Umpire, and within the sixty days required by the insurance policy, Sunshine sent a check to the insured for the appraisal award but unilaterally deducted from the appraisal award,  the amount Sunshine unilaterally concluded would be the amount of depreciation.

The insured sued and the Third District Court of Appeal held that Sunshine improperly deducted depreciation in the amount of $49,000.   The Court ordered the award be corrected and awarded attorney fees  for enforcement of an appraisal award where as here, the insurer unilaterally, and improperly, deducted depreciation. Along with the $49,000  enforcement of the award the court  attorney fees of $135,000.00, and amount over three times the recovery.

The lesson is that as Umpires, we must stick to the policy to not only assure that the Insured is fairly treated, but that the carrier is not prejudiced by the panel’s decision.