A Florida appellate court held that once a first-party property dispute arises, an insurer must provide an insured with notice of the right to mediate before it can demand appraisal. Kennedy v. First Protective Ins. Co., 2019 Fla. App. LEXIS 3443 (Fla. 3d DCA Mar. 6, 2019).

The insureds made a claim with their insurer for replacement of windows damaged in a storm. The insurer suggested that the windows only needed to be repaired, not replaced, but the insureds advised that the window model was no longer produced, and thus needed replacing. This disagreement continued for months, after which the insurer demanded appraisal. The insurer then provided the insureds with notice of their right to mediate. Subsequently, the insureds filed a breach of contract lawsuit, and the insurers moved to compel appraisal. The trial court granted the insurer’s motion, and the insureds appealed.

The appellate court reversed. It focused on the intent of the statutory mediation requirement, which is to provide an informal and non-litigious forum to resolve claims before being forced to participate in expensive and adversarial processes, such as appraisal or litigation. The appellate court opined that the statute places the burden on an insurer to provide notice to insureds of their right to mediate claims before taking part in appraisal, and without this notice, an insured cannot be forced to participate in appraisal. The appellate court also found that the insurer was anticipating litigation months before the insureds filed suit and was therefore aware that a dispute existed at that time. Thus, the appellate court found that the insurer was acting in opposition of the statutory intent by failing to first work with the insureds toward resolution in a non-adversarial forum.