New Ruling in Favor of CSK Client Clarifying Rules for Assignees on Insurance Policies

CSK Partner, Mark D. Tinker and Associate, Mary Lou Cuellar-Stilo, representing People’s Trust Insurance, obtained a favorable ruling from Florida’s Fourth District Court of Appeal. The appellate panel reversed the lower court decision to award damages under an insurance policy to the assignee of the policyholder, since the homeowner failed to comply with a preferred-contractor endorsement in the insurance policy.

The homeowner notified People’s Trust of water damage to her home, they inspected and advised the homeowner that coverage existed for the claim. The company also advised it would use its preferred contractor to complete the repairs. The homeowner used appellee First Call 24/7 Inc. to make the repairs, which People’s Trust paid $6,800 for emergency services.

People’s Trust requested the homeowner complete a work authorization for the remaining repairs so that its preferred contractor could commence restoration. The appellate court ruled that the homeowner never authorized the work and instead used First Call to complete the restoration services. First Call submitted an invoice to People’s Trust for $19,863.96 for restoration services, which People’s Trust did not pay. First Call brought suit as the assignee of the homeowner, according to the ruling. Both sides filed motions for summary judgment. The trial court denied the insurer’s motion and granted First Call’s, entering judgment for $10,988.02.

The panel cited the People’s Tr. Ins. Co. v. Tosar ruling, where Florida’s Third District court of Appeal found that People’s Trust was not at fault, because it had notified the homeowner about the repairs in a timely fashion, and used its preferred contractor to do the repairs, as allowed in the policy.

Since the homeowner in the latest case had failed to execute the work authorization in spite of three requests by People’s Trust, the court found that to be a material breach of the policy, the ruling stated.

People’s Trusts’s liability applies only when the insured fails to inform People’s Trust prior to permit work and this failure to notify acts to disallow the company from the repair process. The homeowner breached the policy by failing to give the authorization form, and had avoided the explicit terms of the policy by hiring First Call to perform the non-emergency repairs.

The court reversed the money judgment in favor of First Call, and remanded for entry of final judgment in favor of People’s Trust.

Mark D. Tinker
(813) 509-2613

Mary Lou Cuellar-Stilo
(813) 864-9310

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