A recent Fourth District Court of Appeal decision clarifies that a specific contractor named to perform repairs in an insurance policy also includes necessary subcontractors, at least where the contractor’s license requires them to subcontract a portion of their work. The case provides clear interpretation of Chapter 489, Florida Statutes, and clarifies that contractors should be allowed to hire required subcontractors even where the contract does not expressly allow it.
People’s Trust Insurance Company v. Lamolli, arose a homeowner’s claim for property damage caused by Hurricane Irma in 2017. In response to the homeowner’s claim, the insurance carrier accepted coverage, but stated that the damages did not exceed the homeowner’s deductible. The carrier also invoked its right to use its preferred contractor, Rapid Response Team, to perform any repairs above the deductible.
The homeowner filed suit against the contractor for breach of contract. The carrier filed a motion to compel an arbitration, a motion to compel its right to repair, and a motion to compel payment of the policy deductible. These motions included a request that the insured “be compelled to attend appraisal, sign a work authorization, pay the applicable deductible to RRT, and let RRT and/or its subcontractors perform all covered repairs pursuant to the appraisal panel award to follow subject to that award exceeding the Policy's deductible.”
Ultimately, the damage was appraised at $59,170.03, and included the entire roof system of the home and screen enclosure damages. Soon thereafter, Rapid Response Team sought authorization for one of its subcontractors to enter onto the homeowner’s premises to make the repairs. The homeowner objected, claiming that the policy required Rapid Response Team to make the repairs, not any subcontractors. Because Rapid Response Team is a licensed general contractor in Florida, and not a licensed roofing or screening contractor, the homeowner argued that Rapid Response Team could not comply with the insurance policy provisions.
The insurance carrier filed another motion to compel to allow the repairs to take place. The trial court agreed with the insured and ruled that only Rapid Response Team was allowed under the policy to perform the repairs. Because Rapid Response Team was not properly licensed to do so, the court ultimately entered judgement against the insurance carrier and in favor of the insured for the full amount of the appraisal.
The insurance carrier appealed, arguing that the policy’s language, in conjunction with 489.113(3), Florida Statutes, required it to be allowed to use Rapid Response Team to conduct the repairs using subcontractors. The appellate court agreed, rejecting the homeowner’s argument that the policy only gave the carrier the option to (a) pay the claim or (b) have Rapid Response Team perform repairs it was licensed to do.
In reaching this conclusion that appellate court looked to the language of the policy, which required the homeowner to “execute all work authorization to allow contractors and related parties entry to the property.” The court reasoned that:
If Rapid Response Team were the only entity authorized by the insurance policy to work on the property, the policy would not use the plural of contractor or related party. Thus, the policy contemplates that entities or persons other than Rapid Response Team may perform work on the property.
The court also looked to 489.113(3), Florida Statutes, which states:
(3) A contractor shall subcontract all electrical, mechanical, plumbing, roofing, . . . unless such contractor holds a state certificate or registration in the respective trade category, however:
(a) A general, building, or residential contractor, except as otherwise provided in this part, shall be responsible for any construction or alteration of a structural component of a building or structure, . . .
The court concluded that this language both required Rapid Response Team to be subcontract the work, while also being responsible for the roof repairs. The court summed its final conclusion as follows:
Pursuant to the insurance policy, the insured agreed to People's Trust's use of RRT as the general contractor. And in order to comply with the statute, RRT must use a licensed subcontractor to complete the roofing repairs. Further, the policy contemplates the use of other “contractors and related parties” and a “reasonable, practical, and sensible interpretation” of that language would include subcontractors.
Accordingly, the appellate court reversed the judgment in favor of the homeowner and remanded for further proceedings.
There are two takeaways from this decision for contractors. First, those that work as preferred contractors for insurance carriers now have clarity that the insurance policies they work under should include their use of appropriate subcontractors. Second, this case also should support the interpretation of other construction-related contracts as allowing contractors to use appropriately licensed subcontractors even if the agreement doesn’t expressly state that subcontracting is allowed.