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Last Post 01/15/2010 10:37 PM by  Ray Hall
? on Appraisal Process.
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jayteedee
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12/22/2009 10:16 PM

    I have been appointed appraiser for a carrier involved with a substantial contents claim.  The policyholder hired a PA firm  The PA firm requested appraisal and have named their appraiser in this matter.  The appraiser they have "appointed" I absolutely know writes structural estimates for the PA firm as I have come across this appraiser on a prior loss with the same PA firm very recently.   

    While I don't know the legal relationship between the appraiser and PA firm (employee/independent contractor etc), I would believe that the appraiser appointed should not be accepted by the carrier due to conflict of interest or a lack of independence or impartiality. 

    Your thoughts? 

    alanx1
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    12/23/2009 10:22 AM
    Depends on what state you are in. I often encounter appraisers for the insured that are PA's with the representing PA firm.
    Medulus
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    12/23/2009 11:24 AM

    In a perfect world the appraisers would both be impartial. But in reality, the insured's appraiser will generally take the insured's point of view and the insurer's appraiser will take the insurer's point of view. Though they may try to come to agreement, an appraisal more often than not goes to an umpire. It is important that 1. The umpire be impartial, and 2. The umpire be an expert in the field in which the appraisal is centered. For example, an accountant is the best choice for a business interruption appraisal and a construction expert is the best choice for an appraisal involving a building.

    The carrier has no right to accept or reject the insured's appraiser. The insured is paying for the appraiser and has the absolute right to name who that person will be. It can be their cousin Fred who works at the Seven Eleven if they want it to be. After all, he knows the price of some contents that he sells off the shelf. My advice to you -- 1. Work up your analysis. 2. Let the insurer know what your opinion is so they will not be surprised and can make any additional payments voluntarily if you think they are too low. 3. Go into the appraisal and present your position and listen to the other side. 4. KNOW THE DIFFERENCE BETWEEN AN APPRAISAL AND AN ARBITRATION. 5. Remember that two people have to agree on the value.  This is not a negotiation as much as a determination of actual value, so splitting the difference is not appropriate.  If the carrier wanted to split the difference, they could have negotiated the claim without the assistance of an appraiser.  6. Make sure you can back up your figures so the umpire will be more likely to side with you.

    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
    Tom Toll
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    12/23/2009 12:19 PM

    Steve has just given you the correct information. Stick with what he has told you and you can't go wrong.

    Success is not final, failure is not fatal: it is the courage to continue that counts.
    Leland
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    12/23/2009 1:31 PM
    as usual, every state is different
    wscook
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    12/24/2009 2:16 PM
    I am a public adjuster and I have recently been appointed by a policyholder to act as an appraiser for a disputed property loss.  The insurers appointed an appraiser that has worked for the insurer in the past.  I know for a fact that he did work for them as I had him on another claim last year.  I don't know the details of the prior arrangements for employment and pay but I have a concern that  there could be a conflict as he will be looking for future work from the same insurer.  It looks like a possible conflict of interest or potential of prejudice for lack of impartiality.  Can I use the same information and instructons that Steve and Tom  provided to solve my dilemma.
    William S Cook
    Florida Public Adjuster
     
    William S Cook Public Adjuster/Umpire/Appraiser
    Medulus
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    12/24/2009 2:25 PM

    Touche, Sir Cook! I think you could use the same information Tom and I gave above. Of course, instead of informing the insurance carrier of what your valuation is, you would want to let the insured know how you see the valuation so they can adjust their expectations if you believe they are asking for too much.

    So, now I have PAs wanting to use my advice? What's next.  In reality, I doubt my post has anything you didn't already know.

    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
    okclarryd
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    12/24/2009 2:34 PM
    Very good, Mr. Cook.
    Very good.

    Merry Christmas to all
    Larry D Hardin
    Ray Hall
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    12/24/2009 6:56 PM

    This impartial thing has always been ignored to my knowledge in Texas. The same carriers always use the same contractors who do almost nothing else but appraisals and the PA's do the same with ex insurance contractors who have changed sides. It,s presentation to the old retired judges in good ole Texas.

    Ray Hall
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    12/24/2009 7:08 PM
    Posted By Ray Hall on 24 Dec 2009 06:56 PM

    This impartial thing has always been ignored on the most appraisals to my knowledge in Texas. The same carriers always use the same contractors who do almost nothing else but appraisals and the PA's do the same with ex insurance contractors who have changed sides. It,s presentation to the old retired judges in good ole Texas.

    by the way Bill, go through the process and if its not "impartial" go into court and try to get the award set aside like NY and some other states do. But keep very good paper records and record all meetings. Make sure no contact is made with umpire, unless both of you are their. Do not crunch estimates until both appraisers agree in writing "the scope of damage" with out side doc,s if needed. The ACV and RC(if applicable) should be agreed as RC is not in most appraisal clauses.

     

    jayteedee
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    12/28/2009 1:21 AM

    I guess my whole issue is that the PA firm isn't even going outside of their own company for their appointed appraiser.  The appraiser appointed is employed by the PA Firm.   I would be as equally concerned if the insurer reassigned the claim to one of their other adjusters and called him/her their appraiser. 

    While I am aware that there are always "relationships" within the industry, former employers etc ..... you would think that there would have to be outside the employment and at least one arm's length away from the current participants. 

    Medulus
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    12/28/2009 9:56 AM
    Jayteedee,

    Read the appraisal clause of the policy. There is nothing that limits who may be appointed as appraiser and nothing that gives the other side the ability to challenge the choice of appraiser of the other side.
    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
    Ray Hall
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    12/28/2009 1:18 PM

    It really depends on the state. Many states will not get involved in the apraisal process. Some states equate appraisal to arbitration. Some like NY will not allow a PA to represent the policyholder.Ther best treatise on this subject was written by  Jonathan J. Wilkofsky the legal council for the NY Pubic adjusters Assoc.

    I dont think Florida allows a PA from the same firm to represent the policyholder. contact me and I will try to get you the law. Medulus is correct, but some awards have been set aside as one side or the other "was not impartial". A carrier would never appoint an appraiser that did not have some simulance of "impartiality" .

    The appraiser for either side should bring up impartiality of either side as soon as he/she is appointed and not select an umpire UNTIL this is clearned up and then procede. So I kinda disagree with neither side haveing a say in the appointment of an appraiser. I sent an affidavit form to the appraiser to sign about this question, which may impeach the appraiser in a contasted award, action to set aside for cause.

    Medulus
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    01/15/2010 2:16 PM
    The following article may shed some light on the original question of this thread:

    Reminder - Bias of Appraiser is No Cause for Disqualification

    In Citizens Property Ins. Corp. v. M.A. & F.H. Properties, Ltd., 948 So.2d 1017, (Fla. 3d DCA 2007), the Third District Court of Appeal rejected an attempt by Citizens to disqualify the insured's appraiser based upon an allegation that the appraiser had "a strong personal bias against an insurer." The court noted that the policy's appraisal clause did not expressly define the word competent.

    In the ruling, the court noted that where the appraisal clause only required that an appraiser be competent rather than neutral or independent, and the mere fact that a party's appraiser may have a strong personal bias against the other party, is not sufficient grounds for disqualifying the appraiser under policy language that does not require neutrality. In explaining its ruling, the court stated:

    "In the absence of a contractual definition, we must presume that this word was intended to be used in its plain and ordinary way as can be ascertained by reference to a dictionary. Winn-Dixie Stores, Inc. v. 99 Cent Stuff-Trail Plaza, LLC, 811 So.2d 719, 722 (Fla. 3d DCA 2002). The dictionary definitions of the word "competent" include "properly or sufficiently qualified or capable; adequate for the purpose; legally qualified or fit to perform an act,"The American Heritage Dictionary 385 (3rd ed.1992), and "duly qualified; answering all requirements; having sufficient ability or authority; possessing the requisite natural or legal qualifications; able; adequate; suitable; sufficient; capable; or legally fit." Black's Law Dictionary 257 (5th edition 1979)."

    In an important test of this rule, and in what might appropriately be called a Good for the Goose-Good for the Gander ruling, the Honorable Michael A. Genden entered a final order of dismissal of a declaratory judgment action filed by the insured against the carrier and Reginald Morris, Jr., Esq. of Groelle & Salmon, P.A. The insured raised issues of both bias and imputed conflict of interest based upon the fact that a different lawyer at Groelle & Salmon, P.A. had conducted an examination under oath of the insured prior to the carrier designating Mr. Morris as Gulfstream's appraiser. Jacobo Rodriguez etc.et al. vs. Gulfstream Prop. & Cas. Ins. Co. & Morris, 11th Circuit Case No.: 09-32752CA24.

    The results of this declaratory judgment action were eagerly awaited both by Groelle & Salmon and its numerous clients who often retain the firm and Mr. Morris to assist with property damage claims which may be headed to appraisal.


    Jonathan M. Sabghir, Esq.
    jsabghir@gspalaw.com
    South Florida Office
    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
    Ray Hall
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    01/15/2010 10:23 PM

    Steve good cases  about impartial. I did not say the appraiser for the other side would sign the affidavit. I will just use this in my presentation to the "neutral umpire". Each state has their own rules on appraisal and lots of cases have been overturned for any number of reasons and many more have been upheld for the same reasons. It seems any professional or any adjuster who works these disputes would fall into this description can not use 2 or 3 employees in a dual role on the same dispute. Attorneys, CPA, Engineers, Adjusters etc.

    Ray Hall
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    01/15/2010 10:37 PM
    Memo to Alan in Alabama. EUO you are correct 3rd party,s have no duty are obligation to attend.
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