Earlier this year, I wrote about a consumer friendly bill signed into law in New York allowing the "scope of loss" to be determined by appraisal. I received a comment to the post providing insight into how insurance carriers are treating appraisals where scope can be in dispute. I thought I would share with our readers and see if others have experiences with insurance carriers presenting similar arguments in New York appraisals.

The New York claim involved a dispute over a matching wood floor. There were two step downs from the damaged area and stairs that lead up to the upstairs wood floor. There were three areas of the matching wood floor. The insurance carrier agreed to pay for the damaged floor and the living room area, which is six inches lower than the damaged floor area. The living room floor area was paid as matching, continuous flooring—not because it sustained direct physical damage from the loss. The family room was also six inches lower than the damaged floor, but was not paid for by the carrier as it stated that the flooring in the family room was not affected from the loss. The stairs leading to the second level of the house are not the same flooring but are stained to match before the loss. The second level of the house is the same flooring as the stairs and is stained to match the stairs and lower level of the house. The insurance carrier agreed to stain and refinish the stairs but not the upstairs flooring. The policyholder demanded appraisal.

The insurance carrier agreed to proceed to appraisal but refused to appraise the family room and upstairs, claiming those areas were not damaged and, since they sustained no damage, were not covered by the policy and not subject to appraisal if it is a coverage issue. It appears the insurance carrier was trying to make the matching issue into a coverage issue and not subject to appraisal.

Have others handling claims in New York seen these types of arguments even after the new law allowing appraisal to deal with the issue of scope? It seems somewhat disingenuous to pay for matching to one area of the floor and then argue that the rest of the floor area involving the same matching issue involves a question of coverage not meant to be handled in appraisal. Appraisal is meant to discourage litigation and costs—not supposed to create more litigation over whether things are right to be appraised. It gets more costly for all involved when the insurance carrier draws a line where the matching of the flooring has gone too far by its perception and leaves the policyholder with decisions to make on how to proceed and how to fight them on their position.

  • Shaun,

    This is happening all over, not just NY. However, it is possible that the carrier adjuster was unaware of the new bill signed.

    The problem lies with the “carrier” appraisers. They usually take “direction” from the carrier (which is in violation of the statute) and are scared to do anything without the carriers approval. It is the appraisers job, via statute, to value the amount of loss. This does not mean exclude portions the “carrier” does not want appraised. Nor, would it mean to include items that the “insured” wants to be included.

    This bill should be pointed out in writing to the carrier appraiser when they do not comply. Then it can be pointed out to the umpire that the carrier appraiser is not following state regulated formats and protocols. It is the Appraisal panels job to include the full “amount of loss”. Then if the carrier wishes to exclude a portion of it they can do so at their own discretion and eventual peril.

    The carrier wants to intervene in the process by directing what can and what cannot be appraised. That right there is an act of bad faith and an obvious attempt to minimize their losses at the expense of the insured.

    The Unfair Claims Practices also includes, “Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled;.” If two persons of the appraisal panel believe the floors should be sanded or not be sanded is an amount found by TWO persons who believed it was entitled!