Independent Appraiser Uses Policy To Protect Policyholders

Written By: Joey Brenna on February 11, 2010 No Comment

Almost all insurance policies have an appraisal clause that allows the parties of the insurance contract to resolve disputes that may arise during a claim. Appraisal is for the “amount of loss,” only. This is the amount of monies it will cost to fully complete the repairs caused by the claim damages. For instance; policyholders could be forced to use an independent appraiser to settle their differences with the insurance company, using the appraisal process to protect their interests.

In a recent Texas case, JM Walker, LLC v. Acadia Insurance Company, reveals how an independent appraiser and the appraisal process protected a policyholder from mistakes made by the insurance company. Mistakes that could have cost the policyholder “hundreds of thousands of dollars!” Each situation can be a bit different simply by how the appraisal clause is worded in the policy, by the type of damage that occurred, and by all the facts pertaining to the loss.

The insured, JM Walker insured five buildings in North Richland Hills, Texas. A severe hailstorm damaged the roofs on all five buildings. As any insured would, Mr. Walker submitted the claim to Acadia, the insurance company who insured the buildings. The adjuster from Acadia denied payment on the claim at first. The adjuster determined that the roofs had minimal damage from the hail and did not require full replacement. This analysis resulted in non-payment because the adjuster’s estimate was under the $5,000 deductible.

Walker disagreed with that analysis and the adjuster’s findings. Acadia then invoked its contractual right to appraisal. Walker tried to take the matter to court by filing a lawsuit, but the Judge compelled the parties to agree to the appraisal process. It is not unusual for the courts to suggest this, as most policies require that all policy provisions be exhausted before entering litigation.

The appraisal process includes two independent appraisers (one hired by each party) and an appraisal umpire. If the independent appraisers cannot agree on an amount of loss they can submit their differences to the umpire. The umpire in this appraisal process found on behalf of JM Walker and produced an award for the amount of loss at $423,053.96. Appraisal awards are binding, therefore, Acadia paid the amount. (You may recall that their first offer was $0, because they determined the loss to be below the $5,000 deductible.)

After the appraisal award was completed, Walker tried to file an appeal of the award to the United States Fifth Circuit. It was Walker’s belief that the hail damage would cost more than the award. He was also seeking additional proceeds for what he believed was “bad faith” by the insurance company’s adjuster’s poor assessment and the way they handled the claim.

In this appeal, the Court ruled that under Texas law, “appraisal awards made pursuant to the provisions of an insurance contract are binding and enforceable, and every reasonable presumption will be indulged to sustain an appraisal award.” The Court also ruled that a binding appraisal can only be overturned in only three situations:

(1) when the award was made without authority; (2) when the award was made as a result of fraud, accident, or mistake; or (3) when the award was not in compliance with the requirements of the policy.”

Mr. Walker diligently tried to argue on all three points. However, the court dismissed his rebuttal on all three. This appraisal and case is a good resource showing the respect the Texas courts have for the appraisal process. It is my opinion that the Independent Appraiser and the insurance appraisal process protected the policyholder in this situation. Mr. Walker should be happy the policy had such a clause. The work that the Independent Appraiser did during this Appraisal was responsible for Walker receiving $418,053.96 over what the insurance carrier said they owe on the claim.

In the event you find yourself within an insurance claim dispute, call upon an Independent Appraiser for assistance in the insurance appraisal process. Insurance Appraisal Services is what we do. Feel free to call Insurance Claims Group, Inc. at 919-669-9111 to have all your insurance appraisal questions answered.

(C) Joe Brennan is President and owner/operator of Insurance Claims Group, Inc., a national independent adjusting, appraisal, and umpiring firm. We will answer your claim questions FREE – Ph: 919-669-9111 . Get Independent Appraiser Help, by visiting http://www.insuranceclaimsgroup.com or http://www.insurance-appraisal-services.com