Last week, I wrote about policyholders’ rights to demand appraisal when a carrier recognizes partial coverage for a loss. Appraisal provisions generally require the parties to meet to determine whether it is possible to reach an agreement on the value of a claim. If not, the parties are required to jointly select a neutral appraiser, known as an umpire, to render a decision.
Interestingly, many carriers, including Citizens Property Insurance Corporation, are increasingly attempting to limit the scope of the appraisal process with stipulations or conditions.
We commonly see these conditions attached to the carrier’s demand for appraisal. Courts often find that carriers attempting to force policyholders into this “modified” appraisal process have waived their right to such process and open the door to litigation.
In Summerfield v. North British & Mercantile Insurance Company,1 the insurance carrier refused to submit to an appraisal except on very precise terms that limited the issues to be resolved in a manner inconsistent with the requirements of the policy. The court determined the carrier waived the appraisal requirement and the insured was free to commence suit in pursuit of his loss.
If a carrier demands appraisal and asks you to agree to limit your rights under an insurance policy, you should seek competent insurance experts that will fight to uphold those rights.
1 Summerfield v. North British & Mercantile Ins. Co., 62 F. 249 (C.C.W.D. Va. 1894).