Supplemental Claims Don’t Need to Include Damage Estimates, Fed Appeals Court Says

A federal appeals court has, at least for now, put an end to lingering questions about some property insurance claims litigation: The insured does not need to submit a competing damage estimate when filing a supplemental claim if the policy does not require it.

But one of the underlying cases that the decision rests on could soon be taken up by the Florida Supreme Court, and that court’s opinion could ultimately impact Monday’s 11th U.S. Circuit Court of Appeals ruling.

The 11th Circuit said in Great Lakes Insurance vs. Concourse Plaza A Condominium Association that the association had waited almost three years to provide a damage estimate and supplemental claim after Hurricane Irma. But that did not violate Florida’s supplemental claims statute, the court said.

“…Great Lakes concedes that the insurance policy by itself ‘does not impose a requirement to provide an estimate of damages,'” the 11th Circuit judges wrote. Concourse Plaza’s September 2020 letter “therefore qualifies as a notice of a supplemental claim under Fla. Stat. § 627.70132. Because it was sent within three years of the date Hurricane Irma made landfall, the provisions of Fla. Stat. § 627.70132 were satisfied.”

The ruling reversed a lower federal court’s decision and remanded the case for further proceedings.

The case began in 2017. After Irma blew through, the association in Bay Harbor Islands, near Miami Beach, filed an initial claim with Great Lakes, noting wind and water damage. The insurer sent an adjuster and concluded the loss was well below the $195,210 deductible, the appellate judges explained. More than two years after Great Lakes denied the claim, Concourse Plaza sent a letter disputing the insurer’s damage estimate and notifying Great Lakes that the condos intended to pursue additional insurance benefits under its policy.

It wasn’t until April 2021 that the condo association submitted its own estimate – $6.4 million, which it later reduced to $3.3 million. The association also demanded an appraisal to decide on the dollar amount of the loss. Great Lakes asked the federal district court in Miami to declare that the Concourse letter did not include an estimate and, thus, was not a valid notice filed within the three-year statutory window in effect at the time. (Florida lawmakers in 2022 reduced that supplemental claims window to 18 months.)

The trial court sided with Great Lakes, the insurance company, holding that the statute requires a damage estimate. But the 11th Circuit felt differently. The appellate judges said that a federal court in this type of case is bound by a state’s previous appeals court decisions. Florida’s 3rd and 4th District Courts of Appeals have rendered conflicting opinions in recent years, and the Florida Supreme Court has yet to consider the issue.

One of the state appeals court decisions was by the 3rd DCA, in Patios West One Condominium Association vs. American Coastal Insurance, handed down in January. The state court decided that state law does not mandate that a supplemental claim include an estimate of additional damages and the statute deals only with notices of claims.

Because the 3rd DCA covers Miami, where the federal Concourse Plaza case originated, the 11th Circuit judges said they had to go with that court’s opinion, regardless of whether they agreed with the reasoning behind it.

The decision gives insureds some flexibility on filing claims but it also complicates claims handling for insurers, attorneys in the state said. For months, an insurer won’t have an idea of the amount of a competing damage amount, making negotiations difficult.

All of that could change, perhaps later this year or early next year. American Coastal Insurance has asked the Florida Supreme Court to take up the Patios case decision. The high court may not decide to hear the case for months, and it could be several more months after that before a decision is finalized.

If the Supreme Court’s opinion differs from the 11th Circuit’s on damage estimates, that could potentially impact the direction of the Concourse Plaza and similar cases, attorneys said.

Top photo: Bay Harbor Islands and Miami Beach.