In Florida, The Department of Financial Services manages a non-binding mediation process that permits policyholders to challenge claims decisions reached by Florida insurers. Florida Statute §627.7015 codifies the mediation process, which applies to condominium association and residential claims in Florida. The purpose of the statute is to use the mediation process to encourage an inexpensive and speedy resolution of insurance claims prior to commencing litigation. Under the statute, insurers in Florida are required to notify all first-party claimants of their right to participate in the mediation program “[a]t the time a first-party claim within the scope of this section is filed.” Florida Statute §627.7015(2).

While the language in the statute itself does not contain a specific timeframe within which the insurer must give the policyholder this notice, the Florida Administrative Code section which implements the mediation process does contain such a time limit. Rule 69J-166.031(4)(a)(1) of the Florida Administrative Code states:

Within five days of the insured filing a first-party claim which falls within the scope of this rule, the insurer shall notify the insured of their right to participate in this program.

If an insurer fails to comply with the notice requirement, the policyholder shall not be required to participate in any contractual appraisal process of the property loss damage as a precondition to legal action against the insurer for its failure to pay the claim. This means that the insurer cannot compel the policyholder to participate in the policy appraisal process before litigation proceeds. Sometimes insurers, once sued, seek to stay litigation and compel the parties to participate in appraisal to resolve the amount of loss. If the insurer fails to provide the policyholder with the required notice of mediation or fails to timely provide the notice, then it should not be allowed to force the policyholder to participate in appraisal before litigating the claim decision.

While the effectiveness of the Florida Department of Financial Services’ mediation process is debatable, it is clear that the aim is to encourage insurers to effectively, fairly and timely resolve property insurance claims with policyholders. Association policyholders should be aware of this process, as well as the consequences for insurers’ failure to comply with the Florida statutes and Administrative Rules involved.