Florida court asks: Can an insurance adjuster be a 'disinterested' appraiser?
The Third District Court of Appeal posed a direct question to the Florida Supreme Court to resolve “a matter of great importance” involving State Farm.
An appellate panel is asking the state’s highest court to decide if policyholders have to hire two professionals — as opposed to one public adjuster who could also serve as a disinterested appraiser — to pursue property-damage claims that their insurance companies have denied.
The Third District Court of Appeal denied State Farm Florida Insurance Co.’s request for a writ of certiorari to quash a Miami-Dade Circuit Court order that permitted homeowners Charles and Diana Sanders to use a public adjuster as their disinterested appraiser. The adjuster had helped the Sanders quantify their claim for reimbursement for property damage following Hurricane Irma.
The appellate court posed a direct question to the Florida Supreme Court as “a matter of great importance.”
“Can a fiduciary, such as a public adjuster or appraiser who is in a contractual agent-principal relationship with the insureds and who receives a contingency fee from the appraisal award, be a disinterested appraiser as a matter of law?” the appellate panel asked the high court.
State Farm said little after the ruling.
“We appreciate the Third District Court of Appeal certifying a question of great public importance to the Florida Supreme Court,” the company said in a statement Thursday. “It would be inappropriate for us to comment further, as the case is in the appellate process.”
Conflict of interest?
Anthony M. Lopez, a shareholder at Marin Eljaiek Lopez & Martinez who represented the Sanders and was successful in obtaining the ruling from the appellate court, says a fiduciary to an insured should be able to serve in that capacity.
“Right now, if you’re in Miami-Dade County and you have a loss, technically, based on the Third [DCA's decision], you don’t have to hire a new person to help you adjust it if it goes to appraisal,” Lopez said. “But if you’re in Broward County, you do. So, they want uniformity in the state.”
Lopez argues that nobody is a disinterested party because the appraisers that State Farm regularly hires have the same motives that State Farm is attributing to the Sanders’ appraiser.
State Farm will employ the same appraiser repeatedly, Lopez said, which would motivate that person to make sure the company pays as little as possible on an insured’s claim.
In the underlying action, Lopez has asked the judge to permit discovery to see “how many millions of dollars State Farm has paid this guy to act as their appraiser.”
“The word ‘disinterested’ really needs to be put into context to what that means for both sides,” Lopez said.
The appellate court, in its opinion, said State Farm had failed to show that the trial court’s order did not follow “the essential requirements of the law,” and would cause material injury to State Farm that could not be remedied on appeal. The Third DCA said it had to deny State Farm’s petition because the trial court relied upon two previous Third DCA decisions, which were binding precedent.
Before granting the Sanders’ motion for rehearing, the appellate court had previously ruled in favor of State Farm. In its earlier decision, the Third DCA had found that a public adjuster who is in a contractual agent-principal relationship with the insured could not be a disinterested appraiser, and overturned the trial court’s order.
Before the hurricane, the Sanders had paid for a homeowners’ insurance policy with State Farm to provide coverage for property damage, according to the opinion. They filed suit against State Farm for allegedly breaching that contract, when the insurer refused to pay for hurricane damage to their home.
State Farm and the Sanders disagreed about the amount of the loss.
The homeowners had a public adjuster help them quantify the damage, pinning it at around $90,000. When State Farm refused to pay their claim, pointing out the 10% contingency fee for the adjuster, the Sanders decided to start an appraisal process. State Farm refused to participate, saying the adjuster hired by the insured could not be the client’s appraiser.
“Every time we have a hurricane, a lot of these cases get resolved through the appraisal process,” Lopez said. “So if a policyholder has to hire not one, but two different people, that money comes out of their pocket. It ultimately diminishes the value of their claims.”
Editor Insight: The appraisal clause in an insurance policy is usually invoked when there is a disagreement between the insureds and their insurer. Since the public adjuster (PA) works solely for the insured and there is already disagreement between the PA and the insurer’s adjuster, it is nearly impossible for the PA to serve as a ‘disinterested’ appraiser in the same claim. There is already a disagreement; why would changing a PA’s role expect to change the outcome in any way?
Bringing in an appraiser is like getting a second opinion on the work to be performed and while both parties are likely to hire appraisers sympathetic to their case, it is similar to hiring an expert to testify in a legal case. An expert is knowledgeable but may still testify for the plaintiff or defendant. An option could be for both parties to call in an umpire, a disinterested third-party, to review the damage and assess the value of the claim based on information from both parties.
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