Are Contingency Fees for Insurance Appraisers Permitted in Georgia?

This question was recently posed to my firm from an appraiser in Georgia. Unfortunately, there is no clear answer. I have to respond with the typical lawyerly answer of “it depends.”

Generally, absent a statute or enforceable policy provision mandating a different result, an insured should be able to hire an appraiser on a contingent fee basis.

If a policy provision precludes an appraiser from working on a contingency fee basis then the policy controls and any appraisal agreement should not contain compensation based upon a contingency.

However, if the policy contains no provision regarding how an appraiser is to be compensated, then the answer is less clear. Georgia doesn’t have a statute addressing whether insurance appraisers can be compensated on a contingency. So you could argue, without a statute or policy provision on point, that the appraiser can be hired on a contingent fee basis.

On the flip side though, insurance carriers are looking for any argument to overturn an award that favors the policyholder. Georgia is generally conservative when it comes to appraisal; for example, Georgia disallows the determination of causation in appraisal. Given this consideration it is likely courts would vacate an award where the appraiser was compensated on a contingent fee basis under claims that the appraiser was not impartial.

I am certainly not endorsing the insurance company’s position that compensation on a contingent fee basis equals partiality. However, this is an argument carriers make to the courts and many courts have agreed with the insurance companies.

Until Georgia has a statute or published case on point the “it depends” answer stands. Insureds and their appraisers must consider the benefits and potential downfalls of compensation on a contingent fee basis.

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Lawrence Meyerhofer - January 13, 2016 9:40 AM

Considering what your post states, I would assume it would be the same for an umpire?

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