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Arbitration and Appraisal Distinguished by Miami Appellate Court

apraisal award.jpgFlorida’s Third District Court of Appeal recently heard an appeal from an Amended Final Judgment after appraisal. The case on appeal was reversed and remanded for further proceedings after the appellate court concluded that the trial court should not have used Florida’s arbitration code to confirm a million dollar insurance claim when there were still unresolved coverage issues. The court determined that the Florida Arbitration Code is not applicable to insurance appraisal rewards when such coverage issues remain unresolved. In Citizens v. Mango Hill, the Third District Court of Appeal explained that there are well defined differences between arbitration and appraisal in the state of Florida. An agreement for appraisal is for the resolution of the specific issues of actual cash value and amount of loss. Typically, appraisal exists for a limited purpose – for instance, the determination of the “amount of the loss.” As such, there are no requirements that appraisers be sworn, as the appraisal process is very informal given that they are often narrow in scope and purpose. Appraisers are generally expected to act on their own skill and knowledge relating to the matters. They are not required to give formal notice of their activities to the parties or counsel, or to hear evidence. And often times, there are specific appraisal agreements covering the scope of the appraisal. On the other hand, an agreement to arbitrate usually involves the disposition of an entire controversy between parties. The Florida Arbitration Code, entitles each party to a full hearing in the presence of the opposing party, unless this right is waived by conduct or an agreement. Arbitrators can not conduct an independent investigation of the issue. In the instant case, Citizens asserts that Mango Hill failed to adhere to the post-loss obligations under the insurance policy thereby negating coverage. Specifically, Mango Hill allegedly failed to allow Citizens’ appraiser to complete a full inspection of the loss claimed, and they also supposedly refused to tender an amended sworn proof of loss or appear for an examination under oath after nearly doubling the claim amount during the appraisal process. Citizens’ asserts that the trial court failed to consider its coverage defenses regarding payment of the award in light of those coverage defenses. The Third District Court of Appeal concluded that the proper procedure requires that Citizens’ coverage defenses be addressed by motion for summary judgment or trial as opposed to an appraisal award confirmation under the Florida Arbitration Code. Here the Court rules that the Florida Arbitration Code will not apply to appraisal awards. For these reasons the appellate court reversed and remanded the case back to the trial court with instructions to comply with the court’s opinion. In the end, this case stands for the general proposition that appraisal is not the appropriate means to resolve and handle coverage disputes. In other words, if there are applicable coverage defenses that have not been disposed of, then the appraisal award cannot be confirmed, and enforced, in the same manner as an arbitration award. On the other hand, it is also clear that if no coverage defenses were asserted, or if the coverage defenses have already been resolved, then the trial court would be free to confirm, and enforce, an appraisal award.

Third District Court of Appeal Tackles Appraisal Agreements

<a href="http://www.floridainsurancelawyerblog.com/Government-Building-450x300.jpg"><img alt="Government-Building-450x300.jpg" src="http://www.floridainsurancelawyerblog.com/assets_c/2013/01/Government-Building-450x300-thumb-300x200-56928.jpg" width="300" height="200" class="mt-image-right" /></a>Appraisal provisions in insurance policies have been getting some much needed attention in the courts over the last few years.  An "appraisal," as defined in a homeowner's insurance clause, is different from the common connotation given to the term appraisal in everyday language. It is not the same as a real estate appraisal used for valuing a home, nor is it equivalent to an estimated value for an item, such as a car or antique. 

Appraisal, as used in a homeowner's policy, is a tool used for determining the value of a home repair dispute that arises from a covered insurance loss.  
Indeed, most 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 of the amount of loss.
 
The <a href="http://www.floridainsurancelawyerblog.com/2011/12/florida-court-of-appeal-affirm.html" target="_blank">appraisal process</a> is an alternative dispute resolution intended to resolve disputes without the need for litigation. Indeed, Florida courts have concluded that appraisal clauses are preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits.

Recently, however, insurance companies have become much more sophisticated regarding appraisal agreements.  Insurance companies often send out elaborate agreements detailing the scope of the appraisal before the appraisal process even begins.  Those appraisal agreements are quickly becoming the source of many disputes.  

One such case was recently decided by the Third DCA.  In <a href="http://www.3dca.flcourts.org/Opinions/3D11-2843.pdf"><u>Citizens v. Casar</u>, 2012 WL 6741083 (3d 2013)</a>, the third DCA held that the insurance company was not required to participate in appraisal given that there was an ongoing dispute over the scope of the appraisal agreement.  

In that case, the insured sustained a significant water loss.  Citizens denied a portion of the claim, but agreed to open coverage for another portion of the claim.  The insureds submitted a written appraisal demand for the entire claim.  Citizens, however, only agreed to participate in appraisal for the portion of the claim that they deemed afforded coverage, but not the whole claim.  The insured refused to sign Citizen's proposed appraisal agreement.  As a result, the insured filed suit against Citizens seeking to have the entire claim, as opposed to just a portion of the claim, appraised.  

The trial court ordered the parties to appraisal, but the third DCA reversed the trial court.  In so doing, the third DCA concluded that Citizens had complied with the terms and conditions found in the insurance policy when it agreed to appraise a portion of the claim, but not the whole claim.  The third DCA reasoned that appraisal may be required only as to those disputes concerning which the parties have expressly agreed.  And in this instance, there was still very much a live dispute as to the scope of damages that could be included in the appraisal.  

Appraisal agreements are often tricky.  Insurance companies are becoming more sophisticated and aggressive with their insistence on having an insured sign a detailed appraisal agreement.  However, if the scope of that agreement does not fully and completely encompass the scope of loss, then the insured may be forever barred from asserting a claim for those additional damages that fall outside the scope of the agreement.  

So before one agrees to sign an appraisal agreement, please make sure that the agreement accurately conveys the scope of damages.  If not, then litigation may be required to determine the proper scope of the claim for appraisal. 
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EXTENDED BODY:
Consequently, a <a href="http://www.alvarezbarbara.com/Practice-Areas/Insurance-Litigation.shtml" target="_blank">Miami insurance claims lawyer</a> should always be called to handle significant damage claims and to address any concerns you may have regarding an appraisal agreement.

Third District Court of Appeal Tackles Appraisal Agreements

Government-Building-450x300.jpgAppraisal provisions in insurance policies have been getting some much needed attention in the courts over the last few years. An “appraisal,” as defined in a homeowner’s insurance clause, is different from the common connotation given to the term appraisal in everyday language. It is not the same as a real estate appraisal used for valuing a home, nor is it equivalent to an estimated value for an item, such as a car or antique.

Appraisal, as used in a homeowner’s policy, is a tool used for determining the value of a home repair dispute that arises from a covered insurance loss.
Indeed, most 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 of the amount of loss.

The appraisal process is an alternative dispute resolution intended to resolve disputes without the need for litigation. Indeed, Florida courts have concluded that appraisal clauses are preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits.

Recently, however, insurance companies have become much more sophisticated regarding appraisal agreements. Insurance companies often send out elaborate agreements detailing the scope of the appraisal before the appraisal process even begins. Those appraisal agreements are quickly becoming the source of many disputes.

One such case was recently decided by the Third DCA. In Citizens v. Casar, 2012 WL 6741083 (3d 2013), the third DCA held that the insurance company was not required to participate in appraisal given that there was an ongoing dispute over the scope of the appraisal agreement.

In that case, the insured sustained a significant water loss. Citizens denied a portion of the claim, but agreed to open coverage for another portion of the claim. The insureds submitted a written appraisal demand for the entire claim. Citizens, however, only agreed to participate in appraisal for the portion of the claim that they deemed afforded coverage, but not the whole claim. The insured refused to sign Citizen’s proposed appraisal agreement. As a result, the insured filed suit against Citizens seeking to have the entire claim, as opposed to just a portion of the claim, appraised.

The trial court ordered the parties to appraisal, but the third DCA reversed the trial court. In so doing, the third DCA concluded that Citizens had complied with the terms and conditions found in the insurance policy when it agreed to appraise a portion of the claim, but not the whole claim. The third DCA reasoned that appraisal may be required only as to those disputes concerning which the parties have expressly agreed. And in this instance, there was still very much a live dispute as to the scope of damages that could be included in the appraisal.

Appraisal agreements are often tricky. Insurance companies are becoming more sophisticated and aggressive with their insistence on having an insured sign a detailed appraisal agreement. However, if the scope of that agreement does not fully and completely encompass the scope of loss, then the insured may be forever barred from asserting a claim for those additional damages that fall outside the scope of the agreement.

So before one agrees to sign an appraisal agreement, please make sure that the agreement accurately conveys the scope of damages. If not, then litigation may be required to determine the proper scope of the claim for appraisal.
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EXTENDED BODY:
Consequently, a Miami insurance claims lawyer should always be called to handle significant damage claims and to address any concerns you may have regarding an appraisal agreement.

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