I recently spoke at a seminar our firm hosted for public adjusters. During the seminar, I had at least three separate conversations with public adjusters who voiced their frustration with the current trends in appraisal in the Garden State and beyond. The common thread was a belief that the insurance carriers were using “bought and paid for” appraisers but they could not prove it.

Several years ago I wrote a blog about the requirements for serving as an appraiser in New Jersey, Who Can Serve as an Appraiser in New Jersey.

Basically, you have to be competent and disinterested. In other words, you have to know what you are doing and your compensation cannot be dependent upon the outcome. This is essentially the same standard in just about every jurisdiction. The question becomes, how can you be assured that the appraiser for the other side meets the qualifications?

The simple answer is to ask. When proceeding to appraisal an insured should ask for these disclosures to be made:

  1. Ask for a copy of their resume in order to determine their competency.
  2. Ask for a listing of all licenses and certifications in all jurisdictions.
  3. Ask for a list of all work the appraiser has done for the other side.
  4. Ask for a listing of all appointments as an appraiser for insurance carriers within the last three years.
  5. Ask for a listing of all appointments as an appraiser for insurance carriers within the last three years.
  6. Finally, ask for a listing of all appointments as an umpire within the last three years.

These six disclosures, if answered, will let you know the appraisal process is starting out on level playing field. I should also note that the insured’s appraiser should be prepared to make the same disclosures. The concept of appraisal is that a group of three skilled individuals, without a dog in the fight, will review a claim and resolve the dispute between the insured and the insurance carrier. The simple disclosures mentioned above will help to assure that the process plays out as it’s supposed to.

  • Bob Schmidt

    I have tried getting the disclosures answered many times I even got Liberty Mutuals Attorneys involved. It was their position that no where in the Policy or the appraisal provision state that their appraisers have to answer any disclosure questions.

  • Lawrence Meyerhofer

    Great Blog as usual. I also think the insurance companies are tired of paying out the differences they have to from the awards reached and are now trying to do away with the fair process. The control is out of the hands of the carrier if an appraisal is done properly and fairly. I think many insureds will go to appraisal but afraid of suit. That’s going to change. Some of the Umpires in NJ have been sued by the carrier for doing the right thing and settling claims. I would consider this STRONG ARMING! Some Appraisers who constantly work for certain carriers never try to settle the claim, there is a pattern with certain individuals that will cut the original estimates from the carriers adjuster then blatantly want an umpire to settle. Is it they are afraid of the carriers they work for? The old saying don’t bit the hand that feeds you. Honesty and integrity right out the window! Great stuff Merlin group, keep up the good work and thank you for keeping us informed and educated.

  • Hello, yes good thoughts. But the PA’s and the assured’s attorneys do not adequately understand value concepts as proffered by the American Society of Appraisers. Glad to help if asked.

    Alex 770 883 6987

  • Jason

    Robert, what is the next step when the appraiser for the insurance company simply says no to these requests?

  • Ed F

    Mr. Robert Trautmann,

    #’s 4 and 5 are identical.

    Is There a corrected additional question to ask that you recommend?

    Is the Opposing Appraiser under a legal obligation to Disclose these past ties without Court Involvement?

    I am in Illinois, and our process follows the rules of the AAA, and not only Request, but the language gas been modified to “Require” Disclosure that a reasonable man might interpret as even the appearance of bias.

    HERE:
    Illinois Appraisal Clause Is Analogous To Arbitration: Case Law Attached

    Illinois

    Compare Travis v. Am. Mfrs. Mut. Ins. Co., 782 N.E.2d 322 (Ill. App. Ct. 2002) (holding that “an appraisal clause is analogous to an arbitration clause
    and is enforceable in a court of law in the same manner as an arbitration clause.”);

    and Beard v. Mount Carroll Mut. Fire Ins. Co., 561 N.E.2d 116, 118 (1990) (“[A]ppraisal clause in the insurance policy is analogous to an arbitration clause, which is enforceable in a court of law, and with which a court may compel compliance.”) with Lundy v. Farmers Grp., Inc. 750 N.E.2d 314, 318 (Ill. App. 2001) (finding no support for notion that the
    Federal Arbitration Act and Uniform Arbitration Act apply to appraisal
    clauses).

    ************************************************************

    Illinois Insurance Appraisal follows Arbitration guidelines.

    https://law.justia.com/cases/illinois/supreme-court/1992/73086-7.html
    The Supreme Court reversed. In an opinion delivered by Justice Black, the Court noted that courts should be “more scrupulous to safeguard the impartiality of arbitrators * * *, since [they] have completely free rein to decide the law as well as the facts and are not subject to appellate review.” (Commonwealth Coatings, 393 U.S. at 149, 89 S. Ct. at 339, 21 L. Ed. 2d at 305.) The Court also considered as highly significant section 18 of the rules of the AAA, which stated:

    “Section 18. Disclosure by Arbitrator of Disqualification At the time of receiving his notice of appointment, the prospective Arbitrator is requested to disclose any circumstances likely to create a presumption of bias or which he believes might disqualify him as an impartial Arbitrator.

    Upon receipt of such information, the Tribunal Clerk shall immediately disclose it to the parties, who if willing to proceed under the circumstances disclosed, shall, in writing, so advise the Tribunal Clerk. If either party declines to waive the presumptive disqualification, the vacancy thus created shall be filled in accordance with the applicable provisions of this Rule.” Commonwealth Coatings, 393 U.S. at 149, 89 S. Ct. at 339, 21 L. Ed. 2d at 305.
    The rules of the AAA have subsequently been changed to require, rather than simply request, the disclosure of potentially disqualifying information. AAA Accident Claims Rule 9 (1987).

    The Court also found the basic principle of this rule to lie in the Code of Judicial Ethics, namely that it “rest[s] on the premise that any tribunal permitted by law to try cases and controversies not only must be unbiased but also must avoid even the appearance of bias.” (Commonwealth Coatings, 393 U.S. at 150, 89 S. Ct. at 340, 21 L. Ed. 2d at 305.) While we do not here equate the role of arbitrator with that of judge, we believe the premise set forth in Commonwealth Coatings to be valid, and agree with Justice Black’s statement that “[w]e can perceive no way in which the effectiveness of the arbitration process will be hampered by the simple requirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias.” Commonwealth Coatings, 393 U.S. at 149, 89 S. Ct. at 339, 21 L. Ed. 2d at 305.