A preferred contractor endorsement in a homeowners policy applies to the contractor hired by the insured.

In this appeal, the Second District Court of Appeals affirmed summary judgment in favor of the insurer when a mitigation and remediation company hired by the insureds, pursuant to an assignment of benefits, attempted to challenge an endorsement in the homeowner policy limiting coverage. Specifically, the insureds purchase a policy from People’s Trust, in which they received a discount on their premiums for inclusion of a preferred contractor endorsement, which states that when a covered loss occurs to the insured’s property “and repairs are necessary to protect property from further damage,” the insured must notify People’s Trust “before authorizing or commencing repairs so [People’s Trust], at [its] option, may select Rapid Response Team, LLC, to make the covered reasonable repairs.” The endorsement also provides that if the insured fails to comply with this requirement, People’s Trust’s obligation for “repairs made to protect the covered property from further damage” is the lesser of the reasonable costs incurred for the repairs or the amount People’s Trust would have paid Rapid Response Team. In this case, People’s Trust entered into a service agreement with Rapid Response Team by which the latter would perform “property loss mitigation, remediation[,] and repair” services for a flat fee of $2,000 per assignment. 

In accordance with the endorsement, following a water loss to the insureds’ home, People’s Trust paid, and Synergy accepted $2,000 for mitigation services. Despite the forgoing, Synergy sued People’s Trust, claiming the endorsement was unenforceable against it because neither it nor the Shuttleworths agreed to the terms of the endorsement and neither was made aware that People’s Trust and Rapid Response Team had a service contract by which People’s Trust would only have to pay $2,000 for mitigation services. Synergy also claimed, by the time the Shuttleworths were made aware of the service agreement, Synergy already had completed those services.

The District Court rejected these arguments, stating: “An insurance policy’s coverage is defined by the policy’s plain language.” People’s Tr. Ins. Co. v. Restoration Genie Inc., 336 So. 3d 332, 335 (Fla. 4th DCA 2022) (citing Fayad v. Clarendon Nat’l Ins. Co., 899 So. 2d 1082, 1086 (Fla. 2005)), and: “The rule of liberal construction in favor of the insured applies only when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction.” Id. (quoting Arguello v. People’s Tr. Ins. Co., 315 So. 3d 35, 38 (Fla. 4th DCA 2021)).

In concluding the endorsement is enforceable against the insureds and Synergy, the appellate court found the language of the policy to be clear that the Shuttleworths must provide notice of a claim prior to authorizing work on that claim. The fact that the endorsement does not lay out the separate contract between People’s Trust and Rapid Response Team—a contract to which the insureds are not a party—does not change that fact. 

_{Legal Update for Florida Coverage & Property Litigation – July 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}