The Florida Insurance Guaranty Association ("FIGA") was bound to the actions of its predecessor insolvent insurer, Southern Family Insurance Company ("Southern"), when Southern failed to comply with the notice requirements of §627.7015(2) Florida Statutes (2005) and did not notify its insured, Shadow Wood Condominium Association ("Shadow") of its right to participate in a mediation program. Shadow, therefore, was not required to submit to the loss appraisal process when sought by FIGA.

After Hurricane Wilma, Shadow submitted a timely claim to Southern for property damage. Southern failed to make any payments for covered losses. FIGA later paid Shadow $308,690 based on its determination of the damages. Shadow did not execute a release and sued FIGA for breach of the policy. FIGA's first demand for appraisal came after filing its Answer and Affirmative Defenses as it only disputed the amount of covered loss. The trial court denied FIGA's motion to compel the appraisal process and FIGA appealed.

The Fourth District noted that §627.7015 applied to this policy (and its included appraisal clause) because it arose from a claim under a homeowner's or commercial residential insurance policy as noted in the language of the statute. In upholding the lower court, the Fourth District noted that the purpose of §627.7015 was to use the mediation process to encourage an inexpensive and speedy resolution of insurance claims prior to commencing the appraisal process or commencing litigation. The statute required the insurer to notify all first-party claimants of their right to participate in the mediation program at the time a first-party claim within the scope of this section was filed. The insured would not have to submit or participate in the appraisal process if the insurer failed to comply with the notice requirements of §627.7015 .

FIGA attempted to avoid §627.7015 by arguing it was not liable for the misdeeds of a defunct insurer. The Fourth District noted that the section did not impose liability on FIGA, beyond the coverage of the policy, for the misconduct of the insolvent insurer, and that the statute was a procedural mechanism affecting access to the court system. The Forth District also rejected FIGA's argument that the appraisal process was a precondition to legal action and therefore could not stay the case until he appraisal process was completed.

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