Virtually all first-party property insurance policies contain an "appraisal" clause whereby each party, insured, and insurer appoint a "disinterested" or "impartial" appraiser who, in turn, selects an umpire to resolve issues of the amount of loss.
The appraisal process is an alternative dispute resolution intended to resolve disputes without the need for litigation. Indeed, Florida courts have concluded that appraisal clauses are "preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits."
A recent case decided by Florida's First District Court of Appeal affirmed the validity of appraisals as an alternative dispute resolution system to avoid unnecessary litigation.
In First Protective Insurance Company v. Erika Hess, the insured filed a claim with her insurance company after her home was burglarized. In response, the insurance company demanded appraisal. The appraisal panel issued an award to the insured, but failed to include an itemization of the personal property and the corresponding values.
As such, the insurance company deducted prior payments and the policy deductible from the amounts awarded while also applying policy limitations for jewelry, cash and other property when calculating the net payment. All of those deductions totaled $78,317.22. As such, and despite an appraisal award of $107,311.58, the insured received a check for only $28,994.36. Not surprisingly, the insured filed a complaint against the insurance company for the difference.
The trial court ruled in the insured's favor. In so ruling, the trial court concluded as follows:
Items such as the deductible and prior payments may be excluded from the amount owed without the Court having to hear extrinsic evidence from the appraisers as to the basis for the award and the reasons for the amounts awarded. The same is not true for deductions based upon special limits of liability. In those cases, the Court would, by necessity, be required to hear testimony from the members of the appraisal panel (and perhaps others who participated in the appraisal process) as to the basis for the award to make these deductions. The Court agrees with Plaintiff that this sort of inquiry behind the appraisal award is not contemplated by the policy, nor permitted by Florida law.
The trial court's ruling was recently affirmed by the First District Court of Appeal. In affirming the trial court, the appellate court concluded that allowing the insurance company to conduct an evidentiary hearing to determine the value of each item would undermine the entire purpose of the alternative dispute resolution of appraisal. After the fact inquiries into an appraisal award would defeat the whole purpose of appraisal and render it meaningless while allowing the insurance companies to flood the court system with lawsuits if they did not agree with the result of the appraisal.
Our Miami insurance dispute lawyers handle insurance claims for homeowners. Our attorneys represented insurance companies before 2006, when we opened a firm dedicated to fighting for the rights of consumers. We understand how insurance companies work. And we have the knowledge and experience necessary to represent homeowners in disputes over an insurance claim.
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Tags: evidentiary hearing, Florida's First District Court of Appeal, net payment, First District Court, florida court
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