Virtually all first-party property insurance policies contain an appraisal clause whereby each party, insured, and insurer appoint a “disinterested” or “impartial” appraiser who, in turn, selects an umpire to resolve issues regarding the amount of loss.
Appraisal is supposed to provide an inexpensive and efficient manner of resolving insurance disputes. However, even after an appraisal award has been rendered, the underlying dispute is not necessarily solved.
I have a number of clients with matters in appraisal and they often ask me, “will I be able to challenge the results of appraisal?” Chip Merlin’s advice to policyholders is: Win the appraisal in any legal and honest way you can because there is little likelihood of overturning a bad appraisal award.
Typically, an insurance appraisal award will not be vacated unless it clearly appears that it was made without any authority or was the result of fraud, mistake, or misfeasance of the appraisers.1 The binding nature of the decision is extremely important because the insured has no recourse to challenge the amount awarded in appraisal.
In Hanover Fire Insurance Company v. Lewis, the court explained that:
The parties in this case, in pursuance of this valid and binding provision in the policy here sued on, entered into a solemn written compact submitting the matter of the “amount” of the loss or damage to two arbitrators or appraisers of their own choosing, with power in them to choose a third as umpire in case or their failure to agree. . . . [P]romptly after the rendition of the award they notified the insurers of their determination not to abide the same; but parties cannot thus arbitrarily rid themselves of the binding force and effect of their solemn contracts. By this award they were bound, and to the amount awarded were they limited in their right to recover, unless they could have shown under proper pleading each fraud or other matter as would in law have avoided the same. In the record here, there is not one scintilla of evidence even tending or attempting to show either irregularity, unfairness or fraud in the procurement of this submission or in its conduct, or result, and we must consequently hold that, in the absence of any such circumstances to avoid it, it is binding as to the extent of the loss on the assured as well as upon the insurers.2
Grounds for modifying or vacating an appraisal award are also reviewed in another Florida case:3
Unless the trial court finds one of the statutorily enumerated grounds apply to vacate an award, neither the trial court, nor a district court of appeal for that matter, has the authority to overturn an award.
As you can see, so long as an appraisal award was authorized by both parties – which it usually is – and not the result of fraud, accident, or mistake, Florida courts will uphold an appraisal award. From my experience, it is very difficult to overturn an appraisal award, so it is imperative that you and your attorney work to make sure that the appraisal process complies with the insurance policy and Florida law.
Thought of the day:
Life’s most persistent and urgent question is, ‘What are you doing for others?’
—Dr. Martin Luther King, Jr.
1 Enzor v. N.C. Farm Bureau Mut. Ins. Co., 473 S.E. 2d 638 (N.C. Ct. App. 1996); Bowdren v. Aetna Life & Cas., 591 A.2d 751 (Pa. Super. Ct. 1991).
2 Hanover Fire Ins. Co. v. Lewis, 10 So. 297, 302-303 (Fla. 1891).
3 American Reliance Ins. Co. v. Devecht, 820 So. 2d 378 (3d DCA 2002).