Prejudgment Interest After an Insurance Appraisal and What is a Denial of Coverage?

In Sunshine State Insurance Company v. Davide (3D08-2376), the Third DCA held prejudgment interest is awarded from the date payment is due and not the date the insured suffers his loss.

The insured and the insurer participated in an appraisal which contained the following question:

This appraisal award is in total, and money previously paid by the carrier to its insured on the subject claim, if any, should bededucted from this award. This appraisal award is subject to the terms and conditions of the policy of insurance (e.g., deductible) and thelaws of the State of Florida.

After the appraisal, the insurer could not determine if it should deduct depreciation from the payment. Unable to get a response from the umpire, the insurer paid the award and subtracted the depreciation. "Some three months later, Davide brought suit to confirm the appraisal award. According to Sunshine, that same day, Davide’s counsel obtained a letter from the umpire which, according to Davide’s counsel, confirmed counsel’s understanding that the award was an actual cash value award which took depreciation into account. This information was provided to Sunshine on March 8, 2007, and the amount previously withheld by Sunshine was paid to Davide on April 4, 2007."

The insured argued deducting the depreciation was a denial of coverage and the trial court agreed. The Third DCA, however, did not. "The record before us confirms that Sunshine has never denied coverage of Davide’s claim, but rather only disputed the amount to be paid under the policy to satisfy this claim...As the court in Mallett makes plain, the provisions governing appraisal deal with “covered” claims and 'determine the date from which the coverage payment is due, as well as when interest is due on the amounts payable'.”

Here, Sunshine’s debt became due when the appraisal liquidated Davide’s loss. That amount came due under the policy sixty days after “[t]here [was] a filing of an appraisal award. . . with [Sunshine].” Davide is therefore entitled to pre-judgment interest on that portion of the appraisal award not timely paid within sixty days of the filing of the appraisal award with Sunshine, not from the date that Davide’s home was damaged.