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Declaration action may occur if an insurance company invokes its right to repair | Property Insurance Coverage Right Blog



People's # 39 Trust Insurance Company ("PTIC") is well-known for invoking the "choice to repair" insurance provision when it is determined that a covered cause of loss occurred to the property of a danger insured under the policy.

In connection with the "choice of repair" clause, PTIC offers approval E023 – "Preferred Contractor Endorsement" in exchange for a premium credit. This is a trap for many homeowners.

On April 15, 2020, Florida's Third District Court PTIC held a legally sufficient declaratory relief for its insured under a homeowner's insurance policy. 1 The underlying case tests the right of the insurer to execute a "choice to repair" policy provision and the insured's right to reject the choice under the policy conditions. 2

On January 30, 201

7, they suffered a water loss from a broken pipe. On March 9, 2017, the insurer inspected the property and examined the water loss. On March 20, 2017, the insurer issued correspondence to the insurers who acknowledged coverage for the loss and informed the insurers of their choice to use their contractor to repair the property. The insurer attached a proposal on the scope of the repair according to "Preferred contractor's inscription." 3

Six months later, PTIC filed a lawsuit requesting:

  1. Explanatory relief of the parties' rights and obligations under insurance; and
  2. a judgment for anticipatory rejection and violation of the policy terms. In response, they insured themselves for dismissal due to failure to file a lawsuit. The Court of First Instance ruled on the insured and rejected PTIC's complaint.

On appeal, the third DCA stated: "[a] Proposal to reject a complaint for explanatory judgment is not a matter of fact. Rather, it is a motion merely to determine whether the complainant is entitled to a declaration of rights, not if it is entitled to a declaration in its favor. " 4 A complaint relief for declaration relief must show: [19659009] (1) A real, present, practical need for the declaration; (2) The statement is about a present, ascertained or ascertainable fact or current controversy about a fact; (3) Some immunity, power, privilege or right of the complaining party is dependent on facts or laws applicable to the facts. (4) There is any person or persons who have, or reasonably may have an actual, present, unfavorable and antagonistic interest in the subject, either in fact or in law; (5) The antagonistic and unfavorable interest [s] is all before the court through proper process or class representation and (6) The requested exemption is not merely to provide legal advice from the courts or the answer to questions raised by curiosity. 5

Florida housing insurance forms often include a choice for repair repairs, and courts have repeatedly analyzed the legal adequacy of these approvals. 6 Disagreement between an insurer and its insured as to the parties' obligations under the policy are correct issues before a court for an explanatory judgment. The purpose of an explanatory judgment is "to give parties relief from uncertainty and uncertainty with regard to rights, status, and other fair or legal relations." 7

Here, the insurer filed an action declaring relief from the parties' obligations under the insurance policy and, in particular, the obligation of the insured to comply with the repair selection clause when it was invoked. The Court of Appeal noted that this "is the type of concrete scenario that is dealt with in Florida's explanatory statute." 8

In previous litigation, this insurance company failed to attempt to enforce a provision for repair with a prohibition injunction bill (for example, an attempt to compel the insured to carry out work permits and allow contractors and related parties to come into the home to perform the repairs). Basic contractual principles prescribe that fair remedies are generally not available when sufficient remedies are available.
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1 People's Trust Ins. Co. v. Franco No. 3D18-2178, 2020 WL 1870361 (Fla. 3d DCA April 15, 2020).
2 The third DCA did not issue an opinion as to whether the People's Trust would be successful in proving the allegations in the complaint.
3 At that moment, the insured retained a public adjustment company to help them obtain the benefits owed under the policy. An insurance request for the selected to repair clause or a preferred contractual thesis essentially forces the insured to have the insurance company repair the property. Policyholders' advocates can be successful with payment for services delivered on an emergency basis.
4 Id. vid * 2nd citation ( Romo v. Amedex Ins. Co. 930 So.2d 643, 648 (Fla. 3d DCA 2006)).
5 Id. at * 3.
6 Id. at * 2.
7 Id. at * 6 citing ( Coal. For Adequacy & Fairness in Sch. Funding, Inc. v. Chile 680 So. 2d 400, 404 (Fla. 1996)) [19659013] 8 [19659014] Id. at 9; see also Fla. Stat. §86.011. [19659027]
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