Can My Public Adjuster Act As My Appraiser?

When damage occurs to your insured property, you may not know who to turn to in order to begin the insurance claims process. Many people choose to hire a licensed Public Adjuster to represent them in filing their insurance claim. Your public adjuster is required to help present the claim to your insurance company and be the liaison between you and your carrier during its claims investigation. Many adjusters will prepare an estimate on your behalf for the damages they feel is covered by the policy using measurements taken from your property and inputting that into adjusting software such as Exactimate. Within 90 days of reporting the claim, your insurance company is required to make a coverage determination. You may not agree with your insurance company’s decision to deny coverage for your claim or may dispute the amount they are willing to pay. Many insurance policies have alternative dispute remedies that either you or your insurance company can request in order to resolve these disputes without having to get into a lawsuit. One of these alternative dispute remedies is by invoking appraisal.

What is a property insurance appraisal?

Within the context of an insurance claim, appraisal is an semi-informal process where the insured and the insurance company will each hire their own appraiser in order to work together with the goal of reaching an agreement to the scope and pricing of an insured loss. In a more practical sense, its where an insured will hire someone to represent their estimate and justifications to their estimate to determine what they feel is the correct cost of repairs and the insurance company will do the same. The appraisers for the insured and the insurance company are required to submit their estimates to each other and attempt to work out their differences. If for some reason they can’t agree, the appraisers will submit their differences to a 3rd party typically called an umpire. The umpire will be the ultimate decision maker as to the final outcome of the insurance claim. This is a very generalized overview of the appraisal process when dealing with an insurance claim.

What are the rules for appraisal?

To put it simply, the rules of appraisal are dictated by your insurance policy. It’s very important that you and your appraiser follow the requirements that are written in your insurance policy. Lets take a look at an example of an appraisal provision:

2. Appraisal
If we and you disagree on the value of the
property or the amount of loss, either may
make written demand for an appraisal of the
loss. In this event, each party will select a
competent and impartial appraiser. The two
appraisers will select an umpire. If they cannot
agree, either may request that selection be
made by a judge of a court having jurisdiction.
The appraisers will state separately the value
of the property and amount of loss. If they fail
to agree, they will submit their differences to
the umpire. A decision agreed to by any two
will be binding. Each party will:

a. Pay its chosen appraiser; and

b. Bear the other expenses of the appraisal
and umpire equally.

If there is an appraisal, we will still retain our
right to deny the claim.

Lets break this one down. The first sentence states: “If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss.” First, there needs to be a disagreement between the insured and its insurance company on the value of the property or the amount of the loss. If there’s no disagreement, you can’t request appraisal. Secondly, both the insured and its insurance company can demand appraisal; not just your insurance company. However, the demand for appraisal must be made in writing.

The second sentence goes on to state: “In this event, each party will select a competent and impartial appraiser.” This means the insured and the insurance company must hire their own appraiser. However, the appraiser that each party selects must be both competent and impartial. A competent appraiser is one who has the knowledge, skill, and ability to conduct an appraisal. Simply put, the insured probably would want to hire someone who is familiar with the insurance claims process and have a general understanding of construction or repair costs. An impartial appraiser is someone who does not have a interest or stake in the outcome of the insurance claim. In other words, the appraiser is there to give his professional opinion of the loss and doesn’t have a financial interest or any kind of interest in giving a more favorable estimate for the appraiser’s client. So in this case, the appraiser that each party hires must be both competent and impartial.

The next two sentences state: “The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction.” The appraiser will then need to work together to select an umpire. They will usually give each other their “picks” as to who they think would be an appropriate umpire for the loss. If they can’t come to an agreement, the insured or insurance company can file a petition with the court to appoint an umpire for appraisal. This is like a “mini lawsuit” which is filed in order for a judge to pick an umpire.

The last couple sentences of the paragraph state: “The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding.”As stated above, the appraisers will determine their own valuation of the amount of the loss and submit it to each other in order to come to an agreement. If they can’t agree on part or all of the amount of the loss, the differences will be submitted to the umpire in order to come to a final decision. Once the umpire and appraisers each come with their values for the loss, the value of the loss will be binding only if any two of the three people from the appraisal panel come to an agreement.

Paragraphs a. & b. state that each party is responsible for the cost of their own appraiser and each party is required to split the cost of the umpire.

And of course, the final paragraph states: “If there is an appraisal, we will still retain our right to deny the claim.” That’s a fun one. Even after going through the appraisal process and paying the appraiser and umpire, the insurance company still reserves the right to deny this person’s claim.

So, lets finally answer the question…

Can My Public Adjuster Act as My Appraiser?

Short answer: Maybe.

Long Answer: You need to review your appraisal provision. If your contract with your Public Adjuster requires that you pay him a percentage of any amount received from your insurance company related to your loss, that Public Adjuster has a financial interest in your insurance claim. If the appraisal provision in your policy is similar to the example provision stated above, there is a very strong argument that you could not use your Public Adjuster as your appraiser. If your policy states that your appraiser must be impartial or disinterested and you are required to pay your Public Adjuster a portion of your insurance proceeds, then that Public Adjuster may be disqualified to act on your behalf in an appraisal. If this language does not exist, you have a strong argument allowing you to use your Public Adjuster as your appraiser.

If you are faced with a claim dispute and are considering taking the route of appraisal, our office can assist you. At Barnard Law Offices, we work with multiple different experts, professionals, and personnel in order to assist policyholders with their insurance claims. If you need assistance with your insurance claim or want to understand what your rights are under your insurance policy, contact us for a free consultation.

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Erik Tyler Barnard, born and raised in Miami, Florida, is passionate about Insurance Law. Since 2015, Erik has played a critical role in several trials where he, alongside the talented trial attorneys at Barnard Law Offices, L.P., has recovered millions of dollars for homeowners where their insurance claims have been wrongfully denied or underpaid.
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