What should you do if you disagree with an insurance company’s decision about your homeowner’s insurance claim? Are you required to participate in the appraisal process? What does the insurance appraisal process entail in Florida? Our insurance law experts will answer these questions and more in this post.
The basic purpose of an appraisal is to resolve a dispute between a policyholder and the insurance company about the amount of loss. This means there is a disagreement about how much you should get paid, not an argument about whether you should be paid at all. Appraisal is an informal process that often takes away the right to have a jury decide how much your claim is worth. However, there are pros and cons to the appraisal process that we will cover here.
Let’s start by addressing whether you always need to participate in an appraisal if you disagree with the insurance company’s decision. The answer is no. There are definitely times when an appraisal is not appropriate or can be avoided with the right legal arguments. We’ll discuss these different issues below, but remember that each situation and policy is unique and really requires a close look to figure out what the options are.
Is an Appraisal Required in Your Homeowner’s Insurance Policy?
The first thing to do in determining if an appraisal is a requirement is to find your insurance policy and read the terms involving appraisal (usually found in the “Conditions” section of most homeowners and commercial property policies).
Some insurance companies in Florida have removed the appraisal clause from their policies. If that’s the case for your insurance company, seeking an appraisal is not going to be an option.
Some policies may have mandatory appraisal clauses that require appraisal in every disagreement. In reading the policy, watch for terms like “must” or “shall” – which might mean that appraisal is a requirement before any other action can be taken to settle a disagreement with your insurance company.
Currently, most policies do not have a mandatory requirement to participate in appraisal. Rather, these policies allow for either you or your insurance company to request appraisal when there’s a disagreement on the amount of loss (i.e. what needs to be repaired and how much it’ll cost). Neither you nor your insurance company is required to request an appraisal. But, if either you or your insurance company requests appraisal, then the other side doesn’t have a choice and must participate.
Sometimes a homeowner’s insurance policy has a “right to repair” clause. This allows the insurance company to choose to repair the home themselves instead of paying money to the homeowners for the repairs made by a company of the homeowner’s own choosing. Depending on how the policy is written, or if there is a disagreement regarding the scope of the repairs that are necessary, a homeowner may still be required to participate in the insurance appraisal process. This could occur if a court considers the disputed scope of repairs to be a dispute over the amount of loss suffered.
Has the Insurance Appraisal been Waived?
Just like many terms in a contract, the right to an insurance appraisal can be waived by either a policyholder or an insurance company. For instance, the insurance company must follow certain requirements of the law in order to require that homeowners resolve their dispute during the insurance appraisal process.
Florida Statutes, Section 627.7015 requires insurance companies to offer to resolve disputes through mediation prior to demanding an appraisal. This law requires that once a claim is filed by a homeowner that falls under this scope, the insurance company must notify homeowners of their right to participate in the mediation program. The insurance company bears the burden of providing this notice and if the insurance company fails to do so it waives the right to appraisal. If the insurance company waives the right to appraisal, a policyholder cannot be forced to go to appraisal.
Some policies also have clauses that require you to go to mediation or to appraisal if the insurance company asks. If an insurance company forces you to go to mediation, this can sometimes remove their right to demand an insurance appraisal later.
Additionally, Florida courts have consistently ruled that appraisal is waived when either the policyholder or the insurance company:
- Actively participates in a lawsuit.
- Engages in conduct inconsistent with the right to appraisal.
When determining whether the insurance appraisal has been waived, courts will look at the time between when the insurance company accepted coverage and when the demand for an appraisal was made. They will also look at the actions that the policyholders took during that time to determine whether they have engaged in significant legal activity.
Factors to Consider If You Want to Pursue a Lawsuit
This means that if you choose to pursue a lawsuit against your insurance company, at some point you may not be able to change your mind and request appraisal, because the Court may determine that you have actively engaged in litigation. A good insurance lawyer in Florida will discuss this with you before proceeding with a lawsuit. This way, you’ll understand your options and can make an educated decision about which route is the best for your case.
If you file a lawsuit against your insurance company in order to get more money, they may file a motion to put the lawsuit on hold at the beginning of the legal process and conduct an appraisal. If the insurance company initially contests your lawsuit, but then changes its mind, a court may determine that the insurance company waived its right to appraisal.
Additionally, an insurance company may “engage in conduct inconsistent with the right to appraisal.” One of the ways that an insurance company may engage in conduct inconsistent with the right to appraisal is to deny a claim. Appraisal (unlike an arbitration clause in a contract) exists for a limited purpose, to determine the amount of loss. When an insurance company denies coverage for a claim, there is not a dispute as to the amount of loss. The insurance company is saying that the loss is not covered at all and that it doesn’t need to pay anything at all. Therefore, it would make no sense to say that a policyholder is required to participate in appraisal to determine the amount of loss when the insurance company has already refused to pay anything. Florida courts have ruled that if your insurance claim has been completely denied, you are not required to go to appraisal.
Other Issues with the Insurance Appraisal Process
Different insurance policies contain different terms. We have seen some appraisal clauses that are very different from the norm. Some require both parties to agree to appraisal, so you could avoid it by simply saying no to your insurance company. Other insurance appraisal provisions have strict deadlines for when appraisal must be requested, and appraisal may not be an option after those deadlines pass.
Contact Our Firm for a Free Insurance Claim Consultation
Appraisal can be a great tool for business and homeowners to resolve their insurance claims, but it is definitely not right for every scenario. It’s important to know your rights so you can weight the best option for your insurance claim.
At Herman Wells, we have a deep understanding the ins and outs of the insurance appraisal process. We’re ready to help you with your insurance claim if you have questions. Contact our law firm for a free consultation or policy review.