Second District Gives Teeth to Loss Settlement Provisions in Homeowners Insurance Policies
In Citizens Property Insurance Corporation v. James Stieben and Jessica Stieben, et al., 41 Fla. L. Weekly D1997 (Fla. Sept. 9, 2016), the Second District Court of Appeal addressed the issue of whether an insured is entitled to damages for breach of a homeowner’s insurance contract when the insurer included a loss settlement provision in the policy.
In the event of an accident or disaster, a loss settlement provision outlines the insurer’s obligation to pay on a claim. In this case, the Stiebens brought a lawsuit seeking damages for Citizens’ failure to use the appropriate method for repairing subsurface sinkhole damage on their property. In its homeowners insurance policy, Citizens included a loss settlement provision, which stated that Citizens had an obligation to pay for repairs but only if the repairs were performed under a subsurface repair contract. At the time of filing suit, the Stiebens had not entered into a contract for subsurface repairs. Notwithstanding the inclusion of the loss settlement provision in the insurance policy, the trial court entered final judgment for the Stiebens, requiring Citizens to pay damages directly to the Stiebens.
However, the Second District Court of Appeal ruled that the trial court improperly ordered Citizens to pay for subsurface repairs before the Stiebens entered into a contract for those repairs. As such, the Court stated Citizens was entitled to a judgment that reflected its obligation to pay for subsurface repairs once the repairs were performed pursuant to a contract.