Steve Badger sent me his amicus brief in an important appraisal case pending before the Texas Supreme Court. Just before finishing a blog on that brief and the case, I researched what others may be saying about the case. I then read Steve Badger’s LinkedIn page, where he called for the following:

Both insurance industry and policyholder stakeholders should get together and propose the following appraisal legislation for all claims governed by TIC 542A

1. Overrule State Farm v. Johnson and limit appraisal solely to disputes involving the cost to repair an agreed amount of damage (the way it used to be).

2. An insured must invoke appraisal prior to sending a 542A pre-suit notice letter. An insurer must invoke appraisal during the 60 day pre-suit notice period. Otherwise, the right to appraisal is waived.

3. In the event of an appraisal award materially greater than the claim measure, the insurance company must pay the insured’s reasonable and necessary attorneys’ fees on an hourly fee basis not to exceed 10% of the increase in claim value. In the event of a zero award, the insured must pay the insurer’s reasonable and necessary attorney’s fees not to exceed 10% of the insured’s specific amount allege to be owed (net of prior claim payments/deductible) in the pre-suit notice letter.

Yes, there is a little “hurt” here for everyone…

–Insurers are encouraged to resolve disputed claims without the need for appraisal.

–Both sides have some risk if they proceed through appraisal with a baseless position.

–Appraisal is limited to pure quantum/measure disputes with scope/causation out of the appraisal process.

–Limits the use of appraisal to claims where there is a real dispute and not just a push for a few extra bucks (as we see with a lot of contractor-driven appraisal demands).

The first item literally calls for policyholders and appraisers to agree to an NFIP-type appraisal where the only losses that are to be determined are those where the parties agree to the damage, and the only items are the difference in price. What a joke, and this was never “the way it used to be.”   

I will never agree to that on behalf of policyholders. Nobody elects to the NFIP appraisal because 99% of appraisals concern much more than just pricing. The causation, damage, scope of damage, methodology of repair, and then various issues of actual cash value are the issues that can be resolved in an appraisal that is final and complete. But not under NFIP guidelines, which Badger suggests everyone adopt.

The one thing about the fox is always to remember it is a fox. It may try to be something else. But, in the end, it is a fox. Steve Badger is a fox for his insurance company clients. At times, I know it kills him, and he will relent to some of the stupidest arguments his clients try to make. But he is a fox for the insurance industry.

I am the opposite—his clients probably call me “Lucifer.” But we trademarked The Policyholder’s Advocate® because we represent policyholder interests long before they become our clients. We do this in numerous ways. One way is through this blog so we can raise awareness of what the insurance company foxes are doing to destroy policyholder rights and interests. Another way we support policyholders is in the various legislative and regulatory bodies trying to fight off the army of insurance lobbyists and foxes the insurance industry relies upon.

Who are our friends? Typically, they include public adjusters, restoration contractors, consumer attorneys who support these efforts, the few existing policyholder consumer groups, and some very involved policyholders. Most policyholders do not keep up with these affairs and study them like we do because they are busy doing other activities in life. None of my friends have the money, influence, and army of lawyers compared to the insurance industry. The ability of policyholders to organize, finance, and campaign against full time lobbyists and propagandists for insurance companies not acting in good faith and fulfilling the promise of prompt and full payment is miniscule. Steve Badger said he was not paid to write his brief, but his insurance clients would not send him cases to argue against them. He is certainly paid, and the insurance industry awards him with having a large practice defending them against policyholders seeking full and prompt recovery.

If Badger’s view is accepted and appraisal becomes something that the insurance industry desires, the result will be a dragged-out affair, not resolving the issues in dispute and making it far too expensive for policyholders to appraise and then litigate what the insurance company should have promptly paid. This is why nobody goes to appraisal with flood claims under the NFIP—the process does not allow the policyholder to collect what is due promptly and efficiently.

While my blog provides awareness of these issues, there is only so much I can do. If you agree with me, please do something. My first suggestion is to support United Policyholders, which advocates against the insurance industry foxes and promotes policyholder rights. Here is the link.

Thought For The Day

A scorpion does what’s in its nature.

—Aesop, “The Scorpion and the Frog”