An insurance company objected to a public insurance adjuster who had been selected as an appraiser in a Tennessee loss, claiming that the public adjuster was not "impartial." The insurer reasoned since the public adjuster was never retained by insurers as an appraiser, he was biased in favor of policyholders. If the objection is valid, I wonder how many appraisers selected by insurance companies will be disqualified as being biased.
While researching the topic, I came across a Tennessee Attorney General Opinion related to the topic. Here is the summary of the opinion:
[N]o Tennessee statute prohibits an insurance adjuster, public or independent from appointment under an insurance policy as an appraiser to appraise personal property. The parties to the insurance policy could agree to such appointment, or one of them could waive a challenge on the ground of disqualification by failing to object in a timely manner. Whether a particular public adjuster or independent adjuster may participate in a personal property appraisal will depend on the facts and circumstances, including, but not limited to, the terms of the insurance policy and whether the adjuster has a pecuniary interest or is otherwise biased or prejudiced in favor of either party.
The analysis is important:
Tennessee case law follows the general rule that appraisers in an insurance case act in a quasi-judicial capacity and should be free from bias in favor of either party…a disinterested appraiser would lack a pecuniary interest in the outcome and would not be biased or prejudiced…A challenge to an appraiser’s service on grounds of disqualification may be waived if not timely raised. . . .
If objection is made, however, case law demonstrates that whether a particular public adjuster or independent adjuster may serve as an appraiser will depend upon individual facts and circumstances. See Harowitz v. Concordia Fire Ins. Co., 129 Tenn. 691, 168 S.W. 163, 163-64 (Tenn. 1914) (insured’s appraiser who had furnished estimate to insured’s adjuster prior to selection as appraiser gave fair and unbiased testimony); Farmers’ Conservative Mut. Ins. Co. v. Neddo, 111 Ind. App. 1, 40 N.E.2d 401 (Ind. Ct. App. 1942) (trial court properly allowed jury to determine whether appraiser was disinterested even though appraiser had been engaged as adjuster to investigate claim at issue); Linford Lounge, Inc. v. Michigan Basic Property Ins. Ass’n., 77 Mich App. 710, 259 N.W.2d 201 (Mich. Ct. App. 1977) (public adjuster who had submitted estimate of loss to insured was nevertheless a disinterested appraiser when the adjusting contract was their first business relationship, contract had expired, and insurer produced no evidence that appraiser engaged in prejudicial misconduct); Equitable Fire & Marine Ins. Co. v. Stieffens, 154 Va. 281, 153 S.E. 731 (Va. 1930) (appraiser was disinterested despite previous service as appraiser for adjustment bureau representing insurer on claim at issue; appraiser was not an employee of bureau or insurer, had no pecuniary interest in either, and was paid on per diem basis for appraisal services).
The practice pointer is that objections to bias should be made at the time of selection. Yet, the legal question of impartiality and disinterest vary significantly from state to state. Tennessee is a state which deems appraisers as acting in a "quasi-judicial" capacity. Compare that to Florida and Michigan which allow appraisers to be retained on a contingent fee basis, as discussed in Michigan Court, Inspired by Florida Case, Rules in Favor of Policyholder and Approves Public Adjuster in Appraisal Matter, Part II.