The Florida Third District Court of Appeals recently held that the policyholder’s public adjuster cannot be the policyholder’s appraiser.1 This decision will have a major impact on appraisals because many public adjusters act as their own appraisers. It should be assumed that the insurance company’s adjusters cannot act as appraisers as well. The decision should be reviewed by all public adjusters, appraisers and umpires that handle appraisals.


The Sanders were represented by Gian Franco Debernardi of 911 Claims Corporation. He wrote an estimate on behalf of the Sanders but could not reach an agreement with State Farm to the satisfaction of the Sanders. The Sanders then filed suit for breach of contract. State Farm then invoked the appraisal clause and the parties entered into an agreed order granting State Farm’s motion to invoke appraisal.

State Farm alleged that Mr. Debernardi could not be considered “disinterested” because of his agent/principal relationship with the Sanders, his contingency fee and his prior estimate of damages. The court felt compelled to opine on all three reasons even though a finding on one would make the others moot.

The Agent/Principal relationship

This court defined the public adjuster policyholder relationship. It concluded that since an insured gives public adjusters the power to represent the insured, the relationship is a fiduciary one. The Sanders court noted Florida Insurance Guarantee v. Ass’n v Branco,2 which involved an attorney in the underlying case naming himself as the appraiser in the claim. The court in Branco stated that if an appraiser owes his nominating party a “fiduciary duty of loyalty” or a “confidential relationship” then the “existence of such relationship between a litigant and an appraiser creates too great a likelihood that the appraiser will be incapable of rendering a fair judgment.” The Branco decision was only ever to apply to attorneys, but the Sanders court has now decided this distinction is too narrow and applies the same line of argument to public adjusters as fiduciaries which then prevents them from ever being designated as a “disinterested appraiser.”

Fiduciary status is a very high status for public adjusters. A fiduciary has many more duties than a regular agent. This should be a topic of discussion for public adjusters in the future.

A Contingency Fee

Unlike other terms such as “qualified,” “competent,” or “independent,” the term “disinterested” has seldom if ever been acceptable if the appraiser had a contingency contract. The Branco decision specifically defined “disinterested” as “free from bias, prejudice, or partiality; not having a pecuniary interest.” The other term frequently found in appraisal clauses “impartial” has been battled about in the last several years with the Southern Districts’ decision in Verneus v. Axis Surplus Insurance Company,3 finding that “To be sure, the Undersigned is not setting forth a rule that an appraiser cannot be impartial whenever his financial compensation is based on a percentage of the recovery. Rather, as is apparent, Stellar’s contingency contract is only one of several factors underlying this decision.”

But in Landmark American Insurance Company v. H. Anton Richardt, DDS, PA.,4 the Middle District of Florida cited Black’s Law Dictionary defining “impartial” as “[n]ot favoring one side more than another; unbiased and disinterested; unswayed by personal interest.” Black’s Law Dictionary (11th ed. 2019). The court then opined that “A pecuniary interest in the outcome is by definition a personal interest that favors one side over the other.” So at least for “impartial,” the pendulum is swinging towards no contingent financial interest in the outcome as a limiting factor when choosing an appraiser.

Prior estimate of damage

This argument is that anyone that writes estimates and hopes to be later named as appraiser should be prevented from doing so. The court noted:

[I]n the case before us, Mr. Debernardi has previously inspected the loss, and he was the person who prepared the written estimate of damages the insureds used to file their claim. It is hard to imagine that Mr. Debernardi is going to reach a different amount from the initial $88,56.41 estimate he already reached.

The Sanders case held that a fiduciary, such as a public adjuster, who is in a contractual agent principal relationship with the insureds, cannot be a disinterested appraiser as a matter of law. You will note that the holding did not directly cite the contingency fee or prior estimate issue. But, you can predict those issues are going to be argued in the future.

The court in Sanders also stated that “it is clear that State Farm and the insureds were free to contract for the qualifications of the appraisers. . . .” This is simply wrong. The insurance policy was a contract of adhesion. State Farm does not negotiate the terms. Indeed, the policy sold must be approved by the Office of Insurance Regulation. Customers do not negotiate the terms, and it is illegal for State Farm to do so with them. This shows a basic misunderstanding by the Sanders court of how insurance works.

It is not surprising that the policyholder’s public adjuster, who is on a contingent contract with the policyholder and made a prior estimate did not qualify as a “disinterested” appraiser in the Sanders case. Whether the same holding will be made with other policy language is certainly going to be the subject of speculation and litigation.

Thought Of The Day

Women, you have all this power…In business, you have something called an inferred fiduciary duty to yourself. Look at the other hugely successful women in industry, commerce, science and everywhere else and you’ll see women who are feminine, beautiful but also do not rely on men for their self-empowerment.
—Gene Simmons
1 State Farm Florida Ins. Co. v. Sanders, 3D19-927, 2019 WL 3309217 (3d DCA July 24, 2019).
2 Florida Ins. Guar. Ass’n v Branco, 148 So. 3d 488 (Fla. 5th DCA 2014).
3 Verneus v. Axis Surplus Ins. Co., No. 16-21863, 2018 WL 3417905, Fn. 2 (S.D. Fla. July 13, 2018).
4 Landmark Am. Ins. Co. v. Richardt, No. 2018-CV-600, 2019 WL 2462865 (M.D. Fla. June 13, 2019).

  • Stephen Sarasohn

    I recently was named appraiser for a claim against State Farm where I was the public adjuster. State Farm objected. I resigned as the public adjuster but State Farm refused to let me be the appraiser anyway. I’m not sure why the either side cares who the other side’s appraiser is. I suppose the words “disinterested” or “impartial” would prevent the property owner from acting as their own appraiser too.

    • Chip Merlin

      Stephen A party to the insurance policy cannot act as their own appraiser if the other side objects. Always good to hear from you.

      • Joel

        So Chip, lets say I have a loss in my house, I cannot be my own appraiser? This is ridiculous. The parties themselves, if qualified, should be able to adjust their own property as the party of the contract does not need a license to do anything that we do for others in exchange for money.

        I know, only a fool hires himself for a lawyer, but this ain’t court, and I can easily do for myself what I do for others, It should be allowed and no policy or contract or statute or case law should remove my right to adjust my own claim in my own house, if I so choose.

        • Chip Merlin


          I can only report on what the case law says. I am not the judge and jury, but the person telling you what the cases say is the law. You cannot represent yourself in an appraisal probably for the same reason you
          cannot be a juror on your on case.

          Thanks for your comment.

  • Jim Johnson

    I would suspect most appraisers for either side are at least
    a little bias towards the party they are representing. Because the Insurer has a definite advantage in terms of experience a d resources over the insured, I would hope that the courts would give them a little more leeway in choosing an appraiser. It is the selection of the umpire that should be more carefully scrutinized as beig impartial!
    PS: Has anyone read the SF appraisal language on the new HW-2136 Policy? It appears to me, that they are trying to make the appraisal process more daunting to the policyholder, especially anyone without representation. Maybe, Chip can add in an opinion on it.

  • Guillermo Saavedra

    I think if the proper arguments are made the courts would find that most appraisers on the carrier side cannot be truly impartial either. As someone that has been appraising claims in Florida for 11 years I run into the same appraisers all the time. Most appraisers have one or two main carriers they work for. If an appraiser primarily works for one or two carriers, how can they be impartial? The only truly impartial party is the umpire and that’s why they exist.

    • Joel

      I agree with this. If the PA, who is a fiduciary of the insured cannot be an appraiser, then how is any adjuster, who is also a fiduciary of his client/employer unbiased by default? Even if they have a fee schedule or n hourly schedule, favorable results yield continued assignments. That, I think, should be prima fascie bias.

      • Chip Merlin

        Thanks for your comment. A number of people have raised exactly the same point you have raised. I do think that insurance company and independent adjusters have the same problem.