A Florida appellate court held that causation is a coverage question for the court’s consideration and not an appraisal panel’s consideration where the insurer denies coverage.Citizens Prop. Ins. Corp. v. Demetrescu, 2014 WL 1225124 (Fla. 4th DCA Mar. 26, 2014). 

The insurer issued a homeowner’s policy to the insured, who reported a claim for damage to its home and some of its contents as a result of a roof leak. The insurer denied coverage and refused the insured’s demand for appraisal, citing multiple policy exclusions, including wear and tear, neglect, pre-existing damage and for noncompliance with post-loss conditions. The insured filed suit against the insurer for breach of contract and later filed a motion to compel appraisal. The trial court granted the motion and directed the parties to proceed to appraisal, stating that, because the coverage issues dealt with causation of damages, they were appropriate questions for the appraisal panel. The insurer appealed. 

The appellate court reversed and held that the trial court erred in submitting the case to appraisal without first resolving the underlying coverage disputes. The appellate court determined that, as the insurer had wholly denied that there was a covered loss, all coverage issues, including causation, must be judicially determined by the trial court and that appraisal could not be used as a vehicle to make causation determinations. The opinion acknowledges that there is a circuit split on this issue, with another appellate court circuit in Florida allowing appraisal to go forward while preserving the insurer’s right to contest coverage.