Prejudgment Interest

HAWKS NEST CONDOMINIUM, INC., etc. v. WESTCHESTER SURPLUS LINES INS. CO., No. 3D22-0102 (Mar. 15, 2023)

KK TAKEAWAY: Loss Settlement provision controls when benefits are due.

KK TAKEAWAY: Agreement to appraisal without previous denial of coverage is not a basis for prejudgment interest from the time of submission of proof of loss.

BACKGROUND:

The trial court entered summary judgment in favor of the insured for entitlement to fees and post-arbitration award interest but denied prejudgment interest for the covered loss. The insured claimed it was entitled to prejudgment interest because a carrier wrongfully denied its claim.

The policy required payment within 30 days if the insured has complied with all prerequisites for coverage and the parties either “reached agreement…on the amount of loss” or “[a]n appraisal award has been made.”

The insured claimed that Carrier violated that loss payment provision by failing to provide payment within 30 days of submission of the proofs of loss. The insured submitted its proof of loss, and Carrier did not respond.

Insured filed a petition to compel appraisal, and Carrier failed to respond, resulting in default. The carrier sought to vacate the default under excusable neglect. Carrier also filed several affirmative defenses, including applying the pre-existing loss exclusion. Subsequently, Carrier agreed to appraisal and issued an undisputed partial payment. An award was entered in favor of the Insured.

The Third District Court of Appeals held that this case differs from a scenario where the Carrier denies coverage. The denial of coverage would trigger entitlement to prejudgment interest. However, submitting the proof of loss would only trigger the right to payment if Carrier agreed with the amount of loss or if an appraisal award was issued. The appraisal was part of the contemplated process regarding loss payments, thus, payment was timely made.