Appraisal Provisions In Property Policies

Article

Presented at PLRB/LIRB claims conference April 13-16, 2008 in Boston, Mass by Andrew P. Rock, attorney, The Rock Law Group, Rick L. Hammond, attorney, Johnson & Bell and Lisa Cronin, coverage counsel, St. Paul Travelers Property & Casualty Co.

Please note, the opinions and views expressed herein relate only to the authors, and should not be construed in any way to be the views, opinions, or representation of The Rock Law Group, P.A., Johnson & Bell, Ltd , The Travelers Companies, Inc., and/or the PLRB.

Initiating Appraisal
Many states have adopted the New York Standard Fire Insurance policy into their codes. The appraisal provision of this form provides that each party will select a “competent and disinterested” appraiser and that the appraisers will select a “competent” and disinterested” umpire.

The disinterested appraiser.

New York
“Disinterested” means not biased or prejudiced, not interested, and not in the employ of either party. Coon v. National Fire Ins. Co., 126 Misc. 75, 213 N.Y.S. 407, affirmed 218 App.Div. 812, 218 N.Y.S. 722 (1926), affirmed 246 N.Y.S. 594, 159 N.E. 665 (1927).

Acceptable partiality.

Referencing arbitrators, the Court held that “Any tribunal permitted by law to try cases and controversies not only must be unbiased but must also avoid even appearance of bias.” U.S. Supreme Court: Commonwealth Coatings Corp v. Continental Casualty Co., 393 U.S. 145 (1968).

Florida
An umpire’s neutrality is not tainted by ex-parte communications with either party. Preferred Nat’l Ins. Co. v. Miami Springs Golf Villas, Inc., 789 So.2d 1156 (Fla. 3rd DCA 2001).

The Court held that although the appraisal clause of the policy required each party to select a “competent and disinterested appraiser,” the contingent-fee appraiser appointed by the insured was nevertheless fully qualified under the present clause. Galvis v. Allstate Ins. Co., 721 So.2d 421 (Fla. 3rd DCA 1998).

Party-appointed appraiser’s direct financial interest in outcome of appraisal through contingency fee arrangement does not disqualify appraiser if appropriate disclosure is made. Rios v. Tri-State Insurance Company, 714 So.2d 547 (Fla. 3rd DCA. 1998).

The term “independent” in referring to appraisers within the appraisal provision of the insurance policy does not limit an appraiser’s ability to be paid on a contingent fee basis.

Michigan
Insureds’ appraiser was not found to be “interested” even though at one time he was the insureds’ public adjuster operating on a percentage basis since he had canceled his contingency fee contract. Linford Lounge Inc. v. Michigan Basic Property Ins. Assoc., 77 Mich.App. 710, 259 N.W.2d 201 (Mich.App. 1977).

New York
Fire loss; court held that mere allegations of bias were insufficient to overcome presumption of validity of appraisal process, and insured’s negotiations of checks received from the insurer in the amount of the appraisal award constituted full accord and satisfaction of insured’s claim. Hemingway v. State Farm Fire & Cas. Co., 187 A.D.2d 814, 589 N.Y.S.2d 956 N.Y.Sup.Ct.A.D. 1992).

Pennsylvania
Where policy called only for “competent” appraisers, a contingent fee did not disqualify appraiser absent proof that partiality caused an unjust result. Hozlock v. Donegal Companies, 745 A.2d 1261 (Pa.Super 2000).

Excessive partiality.

California
Award signed by all appraisers was set aside because appraiser appointed by State Farm was not deemed to be disinterested (same as “impartial”) because he had served as an expert witness for State Farm on one occasion. Gebers v. State Farm Fire and Cas. Co., 38 Cal.App.4th 1648, 45 Cal.Rptr.2d 725 (1995).

Frequency of service as an appraiser may disqualify the appraiser. Falloon v. Caledonian Ins. Co., 161 Cal.App.2d 522, 327 P.2d 18 (1958).

Iowa
The fact that an appraiser had a contingency fee arrangement and a long ongoing relationship with a party disqualified him as a matter of law. Central Life Ins. Co. v. Aetna Cas. And Surety Co., 466 N.W.2d 257 (Iowa 1991).

New York
A contractor employed approximately 1800 times by insurance companies over the course of several years was found not to be disinterested. Sterling Spinning & Stamping Works v. Knickerbocker Ins. Co., 137 Misc. 349, 242 N.Y.S. 201 (App.Div. 1930).

Rhode Island
Following an award of damages by an arbitration board, one of the arbitrators attempted to collect 10% of the award as his fee. The court held that it was improper for him to collect a contingent fee which would give him a direct financial interest in the award. Further, the court held that the party-appointed arbitrator violated his ethical obligations and engaged in conduct that was against public policy. Aetna Casualty & Sur. Co. v. Grabbert, 590 A.2d 88 (Rhode Island 1991).

Tennessee
A disinterested appraiser would lack a pecuniary interest in the outcome and would not be biased or prejudiced. Hickerson v. German-American Ins. Co., 96 Tenn. 19, 193, 33 S.W. 1041 (Tenn. 1895).

Texas
An appraisal award made under terms of insurance policy is generally binding as to amount of loss, however, award may be disregarded where it is (1) not made in substantial compliance with the policy; (2) the result of fraud, accident, or mistake; or (3) made without authority. General Star Indemnity Co. v. Creek Village Apartments Phase V, Inc., 2004 Tex.App.LEXIS 10629 (Tex.Ct.App. 2004).

Appraiser with a financial interest in the outcome of an insurance appraisal is not impartial. The question of appraiser’s lack of impartiality raises a fact question which should be submitted to jury, and if the jury finds appraiser is impartial, it follows that appraisal award was not in compliance with the insurance policy and is not binding

The incompetent appraiser.

Technical proficiency.

New Jersey
Appraiser selected by the insured not rendered incompetent by the fact that he was not in a profession or occupation of contractor, builder or engineer or in the machinery business. American Union Ins. Co. v. Stull Brothers Co., 126 N.J. Eq. 64, 7 A.2d 866 (N.J. Ch. 1979).

Familiarity with process.

Some policies require that the appraisers be “competent and independent” and that umpires be “competent and impartial.” The following cases discuss what is “disinterested,” “independent,” or “impartial.”

Factors which can counter independence.

Employment.

California
Appraisal award was vacated because the umpire was doing a very small amount of business with the insured’s appraiser which gave him the appearance of not being “impartial.” Figi v. New Hampshire Ins. Co., 108 Cal.App.3d 772, 166 Cal.Rptr. 774 (1980).

The fact that neutral umpire had not disclosed his acquaintanceships with insureds’ appointed appraiser and counsel, or his business dealings with insureds’ appraiser was sufficient ground to vacate award in favor of insureds even though no actual fraud or bias was charged. Johnston v. Security Ins. Co. of Hartford, 6 Cal.App.3d 839, 86 Cal.Rptr. 133 (1970).

Award upheld. Insurer’s appraiser was statutorily required to disclose any facts which might cause a reasonable person to doubt he could act impartially, but limited prior work for insurer and insurer’s business with other members of appraiser’s accounting firm lacked continuous or substantial quality that would require disclosure. Michael v. Aetna Life & Casualty Ins. Co., 88 Cal.App.4th 925, 106 Cal.Rptr.2d 240 (2001).

Florida
Loss due to Hurricane Andrew; court ruled that court-appointed umpire in an appraisal involving a business interruption loss should have been recused by trial court when insured brought to court’s attention that umpire had, and was presently working as an accountant for State Farm and the revenues he had collected from State Farm amounted to a considerable portion of his annual revenue. Weinger v. State Farm Fire & Cas. Co., 620 So.2d 1298 (Fla. 4th DCA 1993).

New York
Where an agent representing several insurance companies interested in a fire loss fraudulently represented to insured that the appraiser selected by the agent was not prejudiced, and a company whom the agent did to represent at the time, afterwards signed the appraisal agreement, the award was void as to such company. Kaiser v Hamburg-Bremen Fire Ins. Co., 69 N.Y.S. 344, 59 App. Div. 525 (1901), affirmed 172 N.Y. 633, 65 N.E. 1118 (1902).

Texas
An appraisal award made under terms of insurance policy is generally binding as to amount of loss, however, award may be disregarded where it is (1) not made in substantial compliance with the policy; (2) the result of fraud, accident, or mistake; or (3) made without authority. General Star Indemnity Co. v. Spring Creek Village Apartments Phase V, Inc., 152 S.W.3d 733 (Tex.Ct.App. 2004).

Familial association.

Establishing independence.

Florida
Party-appointed appraiser’s direct financial interest in outcome of appraisal through contingency fee arrangement does not disqualify appraiser if appropriate disclosure is made. Rios v. Tri-State Insurance Company, 714 So.2d 547 (Fla. 3rd DCA. 1998).

The term “independent” in referring to appraisers within the appraisal provision of the insurance policy does not limit an appraiser’s ability to be paid on a contingent fee basis.

No error in the award for business income loss as the umpire’s neutrality was not tainted by ex parte communications with counsel for the insured and the trial court did not err in denying the insurer’s motion to either interview or replace the umpire because of the ex parte communications. Preferred National Insurance Company v. Miami Springs Golf Villas, Inc., 789 So. 2d 1156 (Fla. 3rd DCA 2001).

Education.

Formal education.

College; or

Trade.

Alabama
Award fixing fire loss not invalidated because one of the appraisers was an attorney and not a contractor or architect, where testimony showed that the appraiser had basis for forming proper judgment and policy did not limit the selection of appraisers to contractors or architects. Glen Falls Ins. Co. V. Garner, 229 Ala. 39, 155 So. 533 (Ala. 1934).

Practical education.

Experience.

New Jersey
The appraisal process does not lend itself to the formal introduction of evidence by the parties or the opportunity to submit rebuttal documents or proofs. Appraisers act on their own skill and knowledge, need not be sworn and need hold no formal hearings so long as both sides are given an opportunity to state their positions. Ward v. Merrimack Mut. Fire Ins. Co., 332 N.J. Super. 515 (N.J. Super. Ct. 2000).

Exposure.

North Carolina
Prior employment as an appraiser by the same party did not make the appraiser interested. The court also found that the umpire did not have to have experience with a particular type of machine damaged in the fire. Fireman’s Fund v. Flint Hosiery Mills Inc., 74 F.2d 533, 10 A.L.R. 556 (C.C.A.4 (N.C.) 1935), cert. Denied 295 U.S. 748.

How does Appraisal Work?

Some states hold that appraisal is a form of arbitration and arbitration statutes govern the proceedings.

Arbitration.

California
Code of Civ. Proc. § 1280, et seq.

Connecticut
Our definition of arbitration as “the voluntary submission…of an existing or future dispute to a disinterested person or persons for final determination”… is broad enough to include the appraisal clause [required by Connecticut law]. Covenant Ins. Co. v. Banks, 413 A.2d 862 (1979).

Illinois
An appraisal clause is analogous to an arbitration clause and is enforceable in a court of law in the same manner as an arbitration clause. Where plaintiff’s claims are focused upon alleged fraud and breach of the policy terms by the insurance company, these claims present more than a disagreement between parties concerning actual value of claim, and therefore, dispute is not covered by the appraisal clause. Austin v. Illinois Farmers Ins. Co., 351 Ill.App.3d 931; 815 N.E.2d 435 (Ill.App.Ct. 2004).

Ohio
The difference between appraisal and arbitration presents what seems like a moving target. Some courts have concluded that there is no difference or that the difference is immaterial. Others hold that when the only question presented is the amount of the loss, it is an appraisal. It is suggested that the difference is in the formality of the inquiry: an appraisal is conducted by personal examination and observation–an arbitration implicates solicitation of testimony from witnesses. The scope of the inquiry may be determinative: arbitration occurs when the parties intend that the arbitration determine the whole controversy, including ultimate liability. Alternatively, an arbitration may encompass an entire controversy or be tailored to a particular legal or factual dispute. An arbitration award must be final, binding and without qualification. A determination which is not, is not the result of an arbitration. Both appraisal and arbitration are creatures of contract, and may be defined and classified under ordinary contract principles. Cousino v. Stewart, 2005 Ohio 6245, P27 (Ohio Ct. App. 2005).

Michigan
An appraisal clause in a fire policy which provides for a determination by an umpire constitutes a common-law arbitration agreement. Michigan law requires that in the event that the parties cannot agree on the amount of the loss, either party may request an appraisal and that appraisal must occur prior to commencement of a lawsuit.

In order to show that an insured waived the appraisal provision in the insurance contract, it must show that the insurer delayed substantially in requesting appraisal so as to have waived it. In the present case, the evidence indicates that the insurer made several attempts to move forward with appraisal of the insured’s property, and the insured presented no evidence that delay was caused by anything other than by his own actions or by the actions of the appraiser he hired. Thus, the insurer did not waive the appraisal provision. Beck v. Michigan Basic Property Insurance Assoc., 2003 Mich.App.LEXIS 577 (Mich. Ct. App. 2003).

Applicability of Arbitration Code.

Some jurisdictions hold that insurance appraisals are not a form of arbitration.

Formalities not observed.

Florida
An appraisal provision for property damage in a homeowner’s insurance policy is not an agreement to arbitrate. Therefore, an order granting or denying an appraisal is not appealable as an order involving entitlement to arbitration. Nationwide Mutual Fire Ins. Co. v. Schweitzer, 72 So. 2d 278 (Fla. 4th DCA 2004). See also Cotton States Mutual Ins. V. D’Alto, 879 So. 2d 67 (Fla. 1st DCA 2004).

In a dispute over whether a homeowner’s insurance policy appraisal clause required formal arbitration governed by the Florida Arbitration Code, the State’s Supreme Court followed their decision in Suarez, holding that the appraisal clause in the homeowner’s insurance policy provided for informal appraisal proceedings and did not represent an agreement to submit to formal arbitration proceedings. Allstate Ins. Co. v. Martinez, 833 So.2d 761 (Fla. 2002).

The purpose of post-loss obligations was to provide the insurer with an independent means by which to determine the amount of loss, as opposed to relying solely on the representations of the insured. Scottsdale Ins. Co. v. University at 107th Avenue, Inc., 827 So.2d 1016 (Fla. 3rd DCA 2002).

Georgia
After an appraisal award was decided the insured’s brought an action seeking a declaration that the appraisal clause was invalid. The trial court granted the insurer’s motion for summary judgment. The court affirmed. Contrary to the insured’s contention, the Georgia Arbitration Code, did not apply to contracts of insurance and appraisal clauses in homeowner policies are binding on the parties. Eberhardt v. Ga. Farm Bureau Mut. Ins. Co., 223 Ga. App. 478 (Ga. App. 1996).

Indiana
Atlas Construction Co. v. Indiana Ins. Co (1974) 160 Ind.App. 33, 309 N.E.2d 810.

Michigan
Auto-Owners Ins. Co. v. Kwaiser, (Mich.Ct. App. 1991) 476 N.W.2d 467.

Mississippi
Munn v. National Fire Ins. Co., (Miss. 1959) 115 So.2d 54.

New Jersey
Elberon Bathing Co. v. Ambassador Ins. Co., (1978) 77 N.J. 1, 1, 389 A.2d 439.

Appraisal clause was not an arbitration clause enforceable under the Federal Arbitration Act. Rastelli Brothers, Inc. v. Netherlands Insurance Company T/A Peerless Insurance, 68 F.Supp.2d 440 (1999).

New York
New York courts recognize the role of appraisals in resolving disputes between an insurer and insured where the disagreement is over the value or amount of loss. The appraisal process, unlike an arbitration, resolves only a valuation question leaving all other issues for resolution at a plenary trial. Appraisers are not empowered to address disputes arising from questions of coverage or liability. A dispute between the parties that goes to coverage under the policy and can only be resolved by analysis and application of the policy is not appropriate for appraisal. Indian Chef, Inc. v. Fire & Cas. Ins. Co. of Conn., (2003 U.S. Dist. LEXIS 2199).

Texas
The court held that the insurance appraisal conducted pursuant to the parties’ policy was not an arbitration, and the district court erred by reviewing the appraisal award under the Federal Arbitration Act. Hartford Lloyd’s Ins. Co. v. Teachworth, 898 F.2d 1058 (5th Cir. 1990). Wells v. American States Preferred Ins. Co., (919 S.W.2d 679 (Tex. Ct. App. 1996).

Utah
Federal law supplied the standard for determining whether appraisal was an arbitration within the meaning of the Federal Arbitration Act, and under federal law, the court must determine if the process at issue sufficiently resembles classic arbitration to fall within the Act’s purview. Central to any conception of classic arbitration is that the disputants empowered a third party to render a decision settling the dispute. Appraisal did not constitute an “arbitration” because appraisal would not necessarily settle the parties’ dispute. Salt Lake Tribune Publishing Co., LLC v. Management Planning, Inc.390 F.3d 684 (Utah 10th Cir. 2004).

Miller v. USAA Casualty Ins. Co., 44 P.3d 663 (Utah 2002).

Effective informal appraisal.

Florida
An unambiguous appraisal provision allowed for an informal appraisal proceeding and was not a formal arbitration hearing pursuant to Section 682.06, Florida Statutes. Allstate Ins. Co. v. Suarez, 833 So.2d 762 (Fla. 2002).

New Jersey
Determination of amount of loss in a fire claim through appraisal is not an arbitration proceeding. In re Delmar Box Co., 309 N.Y. 60, 127 N.E.2d 808 (N.Y. 1955).

New York
The court held that although the appraisal award resolved the entire dispute between the parties, it did not mean that the appraisal award was actually an arbitration award. While the trial court concluded that the courts lacked the power to enter judgment upon an appraisal as if it were an arbitration, the appellate court held that the courts did have that power. Penn Cent. Corp. v. Consolidated Rail Corp., 56 N.Y.2d 120 (N.Y. 1982).

North Carolina
The court held that the appraisal provision of the insurance policy merely provided a mechanism whereby the parties were able to rapidly and inexpensively determine the amount of property loss without resorting to a court process. Thus, the appraisal process was not arbitration. PHC, Inc. v. North Carolina Farm Bureau Mut. Ins. Co., 129 N.C. App. 801 (N.C. Ct. App. 1998).

Are hearings to be conducted?

When required.

Colorado
Fire loss to automobiles; court invalidated appraisal of value of cars destroyed by fire where there was no hearing held and insured was not given opportunity to be heard. St. Paul Fire & Marine Ins. Co. v. Walsenburg Land & Dev. Co., 86 Colo. 72, 278 P. 602 (Colo. Sup. Ct. 1929).

Montana
Court held that where fire had destroyed or damaged insured automobile tires, tubes and accessories, and the appraisers and umpires had no accurate information of their own, they were under an obligation to the parties to provide an opportunity to produce whatever evidence they possessed that would aid in the determination of the value of the property lost. St. Paul Fire & Marine Ins. Co. v. Tire Clearing House, Inc., 58 F.2d 610 (8th Cir. Mo. 1932).

New York
Fire loss; court held that although appraisals have been regarded as informal proceedings where appraisers are not obliged to give the claimant any formal notice or to hear evidence, unless it is clear that the insured waives it, he must have notice or knowledge of the meeting of the appraiser, and an opportunity to draw their attention to the items of his loss, and make representations and explanations to them concerning the nature thereof, and thus insure a consideration of his entire claim. Kaiser v. Hamburg-Bremen Fire Ins. Co., 69 N.Y.S. 344 (N.Y. Sup. Ct. 1901).

New Jersey
Fire loss; court held that where property was totally destroyed, the appraisers should give notice to the parties of the appraisal proceedings and let them present their respective claims in each other’s presence. Drescher v. Excelsior Ins. Co., 188 F. Supp. 158 (D.N.J. 1960).

Oklahoma
Fire loss to business property; court held that appraisers’ award was invalid because of their failure to afford the insured an opportunity to present evidence as to the value of the property destroyed. Aetna Ins. Co. v. Murray, 66 F.2d 289 (10th Cir. Okla. 1933).

South Carolina
Court held that if interested parties requested to be permitted to appear before appraisers and make statements or offer evidence with respect to the loss or damage, a refusal to grant such a request would vitiate any award made by the appraisers. Cleveland v. Home Ins. Co., 150 S.C. 289, 148 S.E. 49 (1929).

Formality of hearing.

Attorney involvement;

Court reporter; and

Location.

Cases where no hearing was required.

No hearing.

Florida
Appraisal does not require formal hearing process under Arbitration Code. Allstate Ins. Co. v. Martinez, 790 So.2d 1151 (Fla. 3rd DCA 2001).

Fundamental nature of appraisal relieves appraisers of requirement to hold a formal hearing pursuant to Arbitration Code. Allstate Ins. Co. v. Suarez, 786 So.2d 645 (Fla. 3rd DCA 2001).

Georgia
Court ruled that where neither the policy provisions relating to appraisal, nor the agreement of appraisal stipulated that the parties should be afforded an opportunity to be present at the meeting of the appraisers and present evidence or be given notice of the meeting, neither a hearing nor notice thereof need be given the parties. Pacific National Fire Ins. Co. v. Beavers, 87 Ga. App. 294, 73 S.E.2d. 765 (Ga. App. 1952).

Iowa
Court held that were persons selected as appraisers were experienced contractors and builders and the contract clearly indicated that only an appraisal was contemplated, their failure to hear evidence did not void the award. Vincent v. German Ins. Co., 120 Iowa 272, 94 N.W. 458 (1903).

Pennsylvania
Where policy did not specifically require a hearing, the appraisers were not required to hold one, and the lack of hearing did not make process unfair. Hozlock v. Donegal Companies, 745 A.2d 1261 (Pa.Super 2000).

Utah
Court eld that where the function of experts’ evaluation of fire loss was that of appraisers rather than arbitrators and they had before them a complete record of the inventory and market value of the raw materials and goods which were completely destroyed in a fire, and such goods had a recognized market value at the time of the fire, they were under no obligation to afford the insured’s general manager an opportunity to present evidence regarding the value of goods and materials lost. Phoenix Ins. Co. v. Everfresh Food Co., 294 F. 51 (8th Cir. Utah 1923).

Requesting a hearing, even if it is not required.

Conduct of the proceedings.

Formal procedure.

Florida
Insurer’s notification to the insured of its appraiser 21 days after the hearing on the insurer’s motion to compel appraisal was not so inconsistent with the time provided for notification under the policy that its failure to so act constituted a waiver. Diaz v. American Bankers Ins. Co. of Florida, 662 So.2d 416 (Fla. 3rd DCA 1995).

Hawaii
Hurricane Iniki – Coco Palms Resort – Kauai; the court held that it was beyond the scope of the court’s powers to issue a declaration as to the procedures the appraisal panel must follow. The parties should attempt to agree to a mutually acceptable set of procedures. If the parties cannot agree, the umpire should determine the procedures, so as to provide both parties a fundamentally fair hearing, including adequate notice and opportunity to present evidence and arguments. Wailua Associates v. The Aetna Casualty & Surety Company, 904 F.Supp. 1142 (D.Hawaii 1995).

Indiana
Umpire’s separate appraisal of insured’s loss was appropriate method of resolving differences between appraisers. Jupiter Aluminum Corporation v. The Home Insurance Company, 52 F.Supp.2d 885 (1999).

Oregon
Court ruled that it would not determine the meaning, application or validity of various policy provisions relevant to determining amount of the loss before appraisal, which had been demanded by insurer. Director v. South Carolina Ins. Co., 49 Ore. App. 179, 619 P.2d 649 (Ore. App. 1980).

Texas
Fire loss; court reversed judgment in favor of insurer where there was no failure to agree between insured’s appraiser and insurer’s appraiser, and insurer’s appraiser and umpire simply came to an agreement on the amount of the insured’s loss. Fisch v. Transcontinental Ins. Co., 356 S.W.2d 186 (Tex. App. 1962).

Raising objections.

What Should Be on the Appraisal Award?

See the appraisal clause of the policy. The Standard Form Appraisal Clause provides:
The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; … An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual cash value and loss.

What constitutes the itemization of an award?

Delineating actual cash value/replacement cost.

California
The long recognized statutory appraisal procedure did not deprive the insured of jury trial rights except with regard to setting the dollar amount of the loss under the policy. Insured retains the right to pursue its separate civil action, and it could also maintain a separate action should the insurer fail to pay the amount of the loss set by the appraisers. Appalachian Ins. Co., v. Rivcom Corp., 130 Cal.Ap.3d 818, 182 Cal.Rptr. 11 (1982).

Earthquake loss; court held that with respect to an earthquake policy that provided that the appraisers should state separately the actual cash value at the time of the loss and the amount of the loss, and where an endorsement substituted the term “replacement cost” for “actual cash value,” court held that appraisers could determine the replacement cost of the property as well as the amount of the loss. Unetco Industries Exch. V. Homestead Ins. Co., 57 Cal.App.4th 1459, 67 Cal.Rptr.2d 784 (1997).

Court held that appraiser could not determine the meaning or formula for calculating actual cash value. Jefferson Ins. Co. of New York v. Superior Court, 3 Cal.3d 398, 475 P.2d 880, 90 Cal.Rptr. 608 (1970).

Florida
Line-item appraisal award was required so that any coverage issues could be resolved by court. Dorset House Condominium Association, Inc. v. QBE Insurance Corp., 20 Fla. L. Weekly Fed. D980 (August 1, 2007).

Loss due to Hurricanes Erin and Opal; court ruled, over objection of insureds, that appraisers could determine whether certain ceramic tiles in insureds’ roof should be repaired, or whether entire roof should be completely replaced. Florida Farm Bureau Cas. Ins. Co. v. Sheaffer, 687 So.2d 1331 (Fla. Dist. Ct. App. 1997).

The cost of repair or replacement was an appraisable issue. Florida Select Insurance Company v. Keelean, 727 So.2d 1131 (Fla. 2nd DCA 1999).

The purpose of an appraisal is to determine the amount of damages after coverage has been extended by the insurer. New Amsterdam Cas. Co. v. J.H. Blackshear, Inc., 116 Fla. 289 (Fla. 1934).

Hawaii
Hurricane Iniki – Coco Palms Resort – Kauai; where it was undisputed that the policy provided coverage for the increased cost of repair/replacement caused by the enforcement of building codes and laws, the court held that the appraisal panel had the discretion to consider codes and regulations. Wailua Associates v. The Aetna Casualty & Surety Company, 904 F.Supp. 1142 (D.Hawaii 1995).

Illinois
Class action by insureds over substandard automobile parts did not present on appraisable issue because it required interpretation of “like kind and quality.” Lundy v. Farmers Group, Inc., 322 Ill.App.3d 214, 750 N.E.2d 314, (Ill.App. 2001).

Indiana
Fire loss; court ruled that dispute relating to replacement cost of lost inventory, i.e., cost to replace or market value, could be resolved in the appraisal process. FDL, Inc. v. Cincinnati Ins. Co., 135 F.3d 503 (7th Cir. Ind. 1998).

Kansas
Although the terms of the submission required that the actual cash value of articles be determined, and the damage be placed on each separately, a failure to comply strictly therewith did not render the award void. Boutross v. Palatine Ins. Co., (1917) 100 Kan 574, 164 P 1069.

Michigan
Appraisal award for fire loss was properly itemized, under fire and other policies not defining “item,” where appraisal panel used same categories as those in policy for setting amount of premium, and where award followed painstaking process of investigation. Arkin Distributing Co., v. American Ins. Co., (1978) 85 Mich. App. 359, 271 N.W.2d 430.

Mississippi
In action by insured against insurers to recover for damage done to buildings by hurricanes, in light of fact that face of insurance policies listed each building as a whole as an “item,” requirement that appraisers itemize loss would be construed as calling for statement of actual cash value and loss to each building as a whole rather than to constituent parts of buildings. Mitchell v. Aetna Casualty & Surety Co., (1978) 5th Cir. 579 F.2d 342, citing Couch 2d.

Missouri
Where arbitration award was made upon the form provided by the fire insurer and it complied with the policy provisions and with the arbitration agreement which required separate showing of actual cash value and loss on each item, the word “item” referred to items as listed in the policy and it was not necessary to make a detailed specification of all the minute elements of each item. Phoenix Assur. Co. v. Singer, (1964) 8th Cir. 331 F.2d 10.

An award is void where the policy called for an appraisal and estimate of the loss “by items and in detail,” but instead the appraisers merely made an award stating the value of the loss in the aggregate, without reference to items, or even classes, of property destroyed or damaged. Security Printing Co. v. Westchester Fire Ins. Co., (1920) 204 Mo.App. 390, 221 S.W. 430; Security Printing Co. v. Connecticut Fire Ins. Co., (1922) 209 Mo.App. 422, 240 S.W. 263; Security Printing Co. v. Hartford Fire Ins. Co., (1922) Mo. App. 245 S.W. 1089.

New Jersey
Fire loss; court set aside appraisal award based solely on replacement cost without consideration of depreciation that did not measure “actual cash value,” which the policy required appraisers to determine; court determined that “broad evidence rule” was measure of “actual cash value” in New Jersey, that appraisal only determined “amount of loss” and not liability of insurer, and if trial court found liability on the part of insurer, appraisers should be directed to determine actual cash value according to broad evidence rule. Elberon Bathing Co., Inc. v. Ambassador Ins. Co., 77 N.J.1, 389 A.2d 439 (N.J. 1978).

Rhode Island
Where policy covers real estate, not personal property, so there is but one item to appraise, award may be for gross sum without itemizing each of the constituent elements of the building. Campbell v. Union Mut. Fire Ins. Co., (1924m RI) 124 A. 469, reh. den. (RI) 125 A. 273.

South Dakota
An award which failed to determine the sound value of hay immediately preceding the fire, where the arbitration clause requires that the appraisers shall make an award “stating separately sound value and damage” of the property, is invalid. Lee v. Farmers Ins. Co., (19480 72 S.D. 127, 32 N.W.2d 188).

Texas
Appraisal was appropriate under a stated value policy on a unique motorcycle because policy paid the lesser of the cost to repair/replace or the stated value. Heap v. Progressive County Mutual Ins., Co., 2001 WL 1345694, 2001 Tex.App.Lexis 7390 (Tex. App.-Hous. (1 Dist.)).

Other items which may be broken out.

Coverages.

Alabama
An award will not be invalidated where the policy provided for an itemized determination of the amount of the loss, and the award was not itemized to account for components which constituted the building damage; it was sufficient to itemize the loss according to the various sections of the coverage. Commercial Union Ins. Co v. Ryals, (1978 Ala.) 355 So.2d 684.

Delaware
Appraisers are authorized to determine the cause of loss in deciding the “amount of loss” but questions about coverage and policy exclusions are legal questions for the courts. AIU Insurance Co. v. Lexes, 815 A.2d 312 (Del. 2003).

Appraisers could determine what damages resulted from insured fire because causation was necessarily part of determining the amount of loss. Causation did not involve construction of policy or coverage questions beyond appraisers’ authority. Cigna Ins. Co. v. Didimoi Property Holdings, 110 F.Supp.2d 259 (D.Del. 2000).

Florida
Two separate cases consolidated by the Florida Supreme Court for purposes of determining whether the damage was caused by an event or incident that was covered under the policy. The Second District and Third District Court of Appeal reached differing results. The State Supreme Court held that whether a claim was covered under an insurance policy was a judicial question, not a question for appraisers. Johnson v. Nationwide Mut. Ins. Co. & State Farm Fire & Cas. Co. v. Gonzalez, 828 So.2d 1021 (Fla. 2002).

Agreeing with Licea and allowing appraisers to determine causation: sinkhole or earth movement. Coverage could be decided after amount of loss and causation were determined by appraisers. Nationwide Mutual Insurance Company v. Johnson, 774 So.2d 779 (Fla. Dist. Ct. App. 2000).

Sinkhole claim; the insurer filed a motion to delineate the scope of appraisal, contending that the insureds were seeking damages for repair expenses that they had not yet incurred and were therefore not covered by the policy. Upon an appeal from the trial court’s order denying that motion, the appeals court held that the submission of the claim to appraisal did not foreclose the insurer from challenging an element of loss as not being covered by the policy. Then, only if a court determined that coverage existed for that element of loss, would the amount of appraisal for that element of loss be binding on the insurer. Because the insurer was not precluded from disputing the scope of coverage under its policy and challenging an element of loss that could be awarded by a final judgment in the future, any harm to the insurer was reparable on post-judgment appeal. Liberty American Insurance Company v. Kennedy, 890 So. 2d 539 (Fla. 2005).

In order to determine “amount of loss,” appraisal clause also requires determination of cost of repair and whether a covered peril or non-covered peril caused required repair. State Farm Fire & Casualty Company v. Licea, 685 So.2d 1285 (Fla. 1996).

Under Florida insurance law, “direct physical loss” includes more than losses that harm the structure of the covered property. It also stands for the proposition that repair costs may include more than costs to repair the structure of a building. This Court observed that loss of use coverage primarily compensates insureds when a covered loss makes the premises uninhabitable or unusable. See, e.g., Highlands Ins. Co. v. Kravecas, 719 So. 2d 320, 321-22 (Fla. 3d DCA 1998). While loss of use coverage arguably extends to loss of use when the repair of the covered loss makes the premises uninhabitable or unusable, the primary purpose of having such provision is to cover losses when the loss itself makes the premises uninhabitable or unusable. Three Palms Pointe, Inc. v. State Farm Fire & Cas. Co., 250 F. Supp. 2d 1357 (D. Fla. 2003)

Massachusetts
Appraisal award upheld where appraisers decided that roof damage was caused by lightning versus wind. Fox v. Employers Fire Ins. Co., 330 Mass. 283, 113 N.E.2d 63 (Mass. 1953).

New Jersey
Appraisal cannot decide coverage issues. Rastelli Brothers, Inc. v. Netherlands Insurance Company T/A Peerless Insurance, 68 F.Supp.2d 440 (1999).

Tennessee
Appraisal only determines the monetary value of property damage and is not intended to decide other issues such as the cause of the damage or liability. Merrimack Mutual Fire Ins. Co. v. Batts, 59 S.W.3d 142 (Tenn. Ct. App. 2001).

Utah
Appraisers could determine the amount of loss with respect only to damage to covered property and not the insured’s extra-contractual claims for bad faith and emotional distress. Miller v. USAA Casualty Ins. Co., 44 P.3d 663 (Utah 2002).

Limits.

Prior payments; and

Multiple causes.

Massachusetts
Where insurance policy covered damage caused by lightning, but not by wind, and lightning tore a hole in the insured’s roof, and wind tore off the roof, court upheld appraisal award for $317.00 for the hole only, against the insured’s contention that the appraisers should have evaluated all of the damage, leaving the trial court to decide what should be paid to the insured. Fox v. Employers Fire Ins. Co., 330 Mass. 283, 113 N.E.2d 63 (Mass. 1953).

Mississippi
The segregation of wind-related damages and pre-existing damage to a structure was not appropriate for the appraisal panel. Munn v. National Fire Ins. Co., 237 Miss. 641, 115 So.2d 54 (Miss. 1959).

Ohio
Court upheld decision of appraisers as to which part of the business interruption was caused by fire, a covered peril, and which part was caused by subsequent labor activity which was an excluded peril. Lakewood Manufacturing Co. v. Home Ins. Co., 24 Ohio Misc. 244, 422 F.2d 796 (6th Cir. Ohio 1970).

Pennsylvania
Umpire was not required to provide itemization of snow and ice loss under the policy language which had been modified from the standard form. Statutory language would have required itemization of a fire loss. Riley v. Farmers Fire Insurance Company, 735 A.2d 124 (Pa.Super. 1999).

State laws may determine proper service of the award.

Effecting service of the award.

California
Code of Civ. Proc. § 1283.6 Service of Award.

The neutral arbitrator [umpire] shall serve a signed copy of the award on each party to the arbitration [appraisal] personally or by registered or certified mail or as provided in the agreement.

Requirement of filing.

Signatures.

Signature of appraiser(s);

Signature of umpire.

Effect of Appraisal Award.

Case enforcing the loss payment provision.

Legal enforceability.

California
In accordance with the terms of the business interruption insurance policy, the defendant insurance company was entitled to have the loss submitted to appraisal. Proper demand by the defendant for appraisal was made. The question of the amount of loss under the policy was duly submitted to the appraisers by both the plaintiffs and the defendant. The court ruled that the award as entered was not subject to vacation on any of the grounds set forth in the controlling state statute and that the plaintiffs have failed to show a right to any relief and the complaint was dismissed with costs to the defendant. Nickals v. Ohio Farmers Ins. Co., 237 F. Supp. 904.

Contractual enforceability.

Indiana
Policy provision stating that appraisal “shall determine” amount of loss is binding absent unfairness or injustice even though provision does not state that appraisal is binding. Fact that appraised amount was less than figures submitted by either party were not unfair. Jupiter Aluminum Corp. v. Home Ins. Co., 225 F.3d 868 (7th Cir. 2000) (Ind. law).

Insurer was obligated to make payment on umpire’s appraisal award within 50 days under the terms of the policy, absent a showing of fraud, mistake, misfeasance, or other prejudicial defect. Carroll v. Statesman Ins. Co., (1986, Ind. App.) 493 N.E.2d 1289, remanded (Ind. 509 N.E.2d 825).

Texas
Appraisal awards made under the provisions of an insurance contract are binding and enforceable, and a court will indulge every reasonable presumption to sustain an appraisal award. The effect of an appraisal provision is to estop one party from contesting the issue of damages in a suit on the insurance contract, leaving only the question of liability for the court. Lundstrom v. United Servs. Auto. Ass’n – CIC, 2006 Tex. App. LEXIS 605 (Tex. App. 2006).

Distinguishing the amount of loss from the insurer’s liability.

Amount of loss.

Florida
Appraisers improperly awarded Additional Living Expense to third-party purchaser of hurricane-damaged property considering purchaser did not own property and could not have incurred ALE during policy period. Highlands Insurance Company v. Kravecas, 719 So.2d 320 (Fla. Dist. Ct. App. 1998).

Insurer’s liability.

Florida
The question of coverage is one to be decided by the Court. State Farm Fire & Cas. Co. v. Wingate, 604 So.2d 578 (Fla. 4th DCA 1992).

Indiana
Amount of loss determined by appraisal did not necessarily equal insurer’s liability because insured had to show cost actually incurred for necessary repairs. Weidman v. Erie Ins. Group, 745 N.E.2d 292 (Ind. App. 2001).

Several recent decisions discuss the award of interest and costs in appraisal.

Interest.

Florida
Insured was entitled to interest from date of appraisal award or later date as allowed by loss payment provision as opposed to date of loss. Allstate Ins. Co. v. Blanco, 791 So.2d 515 (Fla. 3rd DCA 2001).

Pre-judgment interest was only allowed from the date of the appraisal award, as that was the date on which the damages were liquidated. Aries Ins. Co. v. Hercas Corp., 781 So.2d 429 (Fla. 3rd DCA 2001).

Insured was not entitled to interest from time of appraisal demand. No interest awarded where insurer paid within time allowed by loss payment provision. Florida statute authorized attorney fees for insured. Liberty Mutual Ins. Co. v. Alvarez, 785 So.2d 700 (Fla. 3rd DCA. 2001).

Michigan
The Michigan Supreme Court has held that when authority to award interest exists in appraisers and umpires, courts may not set aside an award of interest, nor may courts supplement an award that is silent on the element of interest since it is presumed that arbitrators considered interest as an element of damages and rejected it. R. D. Management Corp. v. Philadelphia Indemnity Ins. Co., 302 F.Supp.2d 728 (E.D.Mich 2004).

The appraisal language in the policy and Michigan statute does not confer authority to award common-law interest as an element of damages. Rather, the appraisal language defines the method of determining value of damaged property and insured’s compensable loss resulting from that damage. There is no provision, however, for awarding an amount to compensate insured for the time value of money pending settlement of claim, thus appraisers had no authority to read in such a provision.

Costs.

Florida
The 4th District Court of Appeals concluded that there is no entitlement to attorney’s fees in an appraisal matter where the insurer has not contested coverage but rather participated in the contractual appraisal process because it could not reach an agreement with the insured over the disputed amount of the insured’s claim. Federated National Insurance Company v. Esposito, Case No. 4D05-4480, District Court of Appeal of the State of Florida (August 23, 2006).

Insured was not entitled to attorney fees incurred during appraisal process where suit had not been filed prior to payment by the insurer. Nationwide Property & Casualty Ins. v. Bobinski, 776 So.2d 1047 (Fla. 5th DCA 2001).

Court Held that the goal of the Florida Fee Statute is to place the insured in the place it would have been if the insurer had reasonably paid the claim without causing the insured to retain counsel and incur obligations for attorney’s fees, taken in conjunction with the rule of law that the insured could have recovered any attorneys’ fees incurred in reaching a settlement of its lawsuit, had a settlement been reached, we see no rationale for not extending Florida Statute to cover an award of attorney’s fees associated with an expensive and drawn out appraisal due to Travelers’ disputed value estimation. Travelers Indem. Ins. Co. v. Meadows MRI, LLP, 900 So. 2d 676 (Fla. 4 DCA 2005).

The court held that attorney’s fees are only awardable when an insurer has wrongfully withheld payment of the proceeds of the policy. TriStar Lodging, Inc. v. Arch Spec. Ins. Co., 2006 U.S. Dist. LEXIS 35866 (M.D. Fla. 2006).

Court held that Florida Statute entitled insured to attorney’s fees incurred in appraisal process demanded by insurer after suit was brought by insured. Court also held that appraisal was not condition precedent to insured’s suit. Ajmechet v. United Automobile Ins. Co., 790 So.2d 575 (Fla. 3rd DCA 2001).

Texas
The contract between the Insured and Insurer specified that an appraisal process would be the remedy for any disagreement regarding the amount of loss and that the decision reached by the umpire would set the amount of loss and such an award would be binding. The insurer participated in the appraisal process and tendered the amount awarded by the umpire. The appellate court concluded that because the insurer complied with the requirements of the contract, it could not be found to be in breach. As such, insured was unable to recover attorney’s fees. Brownlow v. United Servs. Auto. Ass’n, 2005 Tex. App. LEXIS 1987 (Tex. App. 2005).

An appraisal award may not be set aside absent a strong showing by the moving party.

Fraud.

Arkansas
An award made pursuant to arbitration provision of a fire policy will not be set aside unless the result of fraud, mistake, or the tortfeasance or malfeasance of the appraisers. Globe & Rutgers Fire Ins. Co. v. Hornor, (1924) 166 Ark. 102, 265 S.W. 351.

Georgia
Appraisal process in homeowners policy was binding despite policy provision that suit could be filed after all requirements of policy are complied with, and appraisal award could be attacked only for reason that would void contract, such as fraud by party obtaining award, palpable mistake of law, or decision by chance or lot. Southern General Ins. Co. v. Kent, (1988) 187 GA App. 496, 370 S.E.2d 663.

Indiana
Party who voluntarily submits to appraisal to determine the amount due under an insurance policy is bound by the appraisal award, absent exceptional circumstances. Jupiter Aluminum Corporation vs. The Home Insurance Company, (1999) 52 F.Supp.2d 885.

New York
An award of appraisers cannot be attacked on the ground of fraud in the selection of the umpire, as shown by affidavits on an application to a county court for the appointment of a disinterested umpire; rather, an appropriate action must be brought to set aside the award. Re: 176 & 178 East Main St., The Buffalo Ins. Co. of Buffalo et al., Appellants; Morris Yoscovitz, Respondent, (1934) 263 NY 197, 188 N.E. 647.

Texas
Appraisal decision is intended to estop one party from contesting the issue of the value of damages in a suit on insurance contract, not to facilitate that type of liability. Appraisal award is binding and enforceable unless insured proves that the award was unauthorized or the result of fraud, accident or mistake. Every reasonable presumption will be indulged to sustain an appraisal decision. Breshears v. State Farm Lloyds, 155 S.W.3d 340 (Tex.App. 2004).

Appraisal awards made pursuant to provisions of an insurance contract are binding and enforceable, and every reasonable presumption will be indulged to sustain the award. The effect of appraisal provision is to estop one party from contesting issue of damages in a suit on the insurance contract, leaving only the question of liability for the court. Franco v. Slavonic Mutual Fire Insurance Assoc., 154 S.W.3d 777 (Tex.Ct.App. 2004).

An appraisal award made under terms of insurance policy is generally binding as to amount of loss, however, award may be disregarded where it is (1) not made in substantial compliance with the policy; (2) the result of fraud, accident, or mistake; or (3) made without authority. General Star Indemnity Co. v. Spring Creek Village Apartments Phase V, Inc., 152 S.W.3d 733 (Tex.Ct.App. 2004).

Appraisal awards made by appraisers and umpire pursuant to provisions of insurance contract can be disregarded if award was made without authority, award was made as result of fraud, accident or mistake, or award was not made substantially in compliance with requirements of policy. Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., (1994, Tex App San Antonio) 877 S.W.2d 872.

Collusion.

California
Award upheld. Insurer’s appraiser was statutorily required to disclose any facts which might cause a reasonable person to doubt he could act impartially, but limited prior work for insurer and insurer’s business with other members of appraiser’s accounting firm lacked continuous or substantial quality that would require disclosure. Michael v. Aetna Life & Casualty Ins. Co., 88 Cal.App.4th 925, 106 Cal.Rptr.2d 240 (2001).

Pennsylvania
Appraisal award will only be set aside where it is clearly shown that fraud, misconduct, corruption or other irregularity caused an unjust, inequitable or unconscionable result. Hozlock v. Donegal Companies, 745 A.2d 1261 (Pa.Super 2000).

Exceeding scope of appraisal.

Arizona
Court overturned appraisal award where appraisers exceeded their authority by determining coverage issues such as deductibles and interest on the award. Hanson v. Commercial Union, 150 Ariz. 283, 723 P.2d 101 (Ariz.App. 1986).

California
An appraisal award may be vacated when the appraisers exceed their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted. Since the umpire clearly exceeded his powers by deciding factual issue not correctly before him, and the award cannot be corrected without affecting the merits of the decision, the court necessarily abused its discretion in granting petition to confirm the award. Edison Textiles, Inc. v. Topa Insurance Co., 2004 Cal. App. Unpub. LEXIS 5243 (Cal.Dist.Ct.App. 2004).

Severe rain loss left dwelling overhanging a cliff and repair required to supporting land; court held that appraisers could not determine what was or was not part of the “dwelling.” Hughes v. Potomac Ins. Co., 199 Cal.App.2d 239, 18 Cal.Rptr. 650 (1962) (disapproved on other grounds).

Theft of personal property: court reversed confirmation of appraisal award because the appraisers did not accept the insured’s description of the items claimed stolen (“set 36 Rajput miniature paintings”) and based its award on its own determination of the identity of the property stolen (“36 [unmatched] paintings”). Safeco Insurance Co. of America v. Sharma, 160 Cal. App.3d 1060, 207 Cal. Rptr. 104 (1984).

In keeping with express terms of arbitration statue, “appraisers” empowered under fire insurance policy to determine amount payable on policy would be considered as “arbitrators,” their confirmed award would be treated as an arbitration, and because insured failed to pursue statutory remedy to vacate or correct award which was then confirmed by Superior Court, independent action on contract by insured seeking damages in excess of award was barred by res judicata effect of confirmed award. Klubnikin v. California Fair Plan Assoc., (2d Dist.,1978) 84 Cal.App.3d 393, 148 Cal.Rptr. 563.

Where an appraisal award is based on a misconception of the law, such fact may be proved to the court by intrinsic evidence, including a declaration of one of the appraisers. Jefferson Ins. Co. v. Superior Court of Alameda County, (1970) 3 Cal.3d 398, 90 Cal.Rptr. 608, 475 P.2d 880.

Florida
A court may modify an arbitration award only for an obvious miscalculation or other self-evident mistake, for ruling on a matter not submitted, and for an imperfection in the form, but not the merits of an award. J.J.F. of Palm Beach, Inc. v. State Farm Fire and Cas. Co., 634 So.2d 1089 (Fla. 4th DCA 1994).

Although there was a large discrepancy between the insured’s and insurer’s estimate of the loss, because the insurer did not wholly deny that there was a covered loss, causation was an amount-of-loss question for the appraisal panel, not a coverage question which could only be decided by the trial court. The umpire exceeded the duties assigned to it by making findings specifically reserved for determination by the trial court. While an umpire generally had the authority to resolve causation issues, since the trial court specifically reserved this issue for the trial court’s determination, the umpire exceeded the authority granted to it by the trial court. Kendall Lakes Townhomes Developers, Inc. v. Agricultural Excess and Surplus Lines Insurance Company, 916 So. 2d (Fla. 3rd DCA 2005).

Fire loss under a commercial policy; court held that appraisers and umpires did not exceed their authority in interpreting policy not to provide coverage for higher cost of replacing inventory destroyed in fire. Illinois Richter v. Western States Ins. Co., 264 Ill.App.3d 230, 636 N.E.2d 1112 (Ill.App. 1964).

Massachusetts
An award of the referees made after determining whether the damage was caused by lightning or by the windstorm was not valid as in excess of their authority. Fox v. Employers’ Fire Ins. Co., (1953) 330 Mass. 283, 113 N.E.2d 63.

New Jersey
Fire loss; court ruled that insured was not bound by appraisal award because policy did not contemplate the submission to appraisers of questions of law, and because appraisal did not address question of whether insureds were only limited to actual cash value where they had suffered a total loss. Feinbloom v. Camden Fire Ins. Assoc., 54 N.J. Super. 541, 149 A.2d 616 (N.J. Super. 1959).

Nevada
In dispute as to whether fire policy covered only reconstruction costs or covered cost of bring building up to code, which was required by city because fire damage exceeded 50 percent of building value, power of appraisers did not extend to disposition of entire controversy but was limited to determination of amount of loss, and appraisers exceeded their powers by addressing themselves to issue of effect of building code, and thus interpreting coverage provisions, in arriving at award. St. Paul Fire & Marine Ins. Co. v. Wright, (1981) 97 Nev. 308, 629 P.2d 1202.

Texas
Appraisers exceed their authority when they engage in making the legal determination of what is or is not a covered loss based on their determination of what caused the loss or a portion of it. Lundstrom v. United Servs. Auto. Ass’n – CIC, 2006 Tex. App. LEXIS 605 (Tex. App. 2006).

Judgments on appraisal award.

Confirmation of appraisal award.

Florida
Storm damage; appraisal award was upheld where the amount awarded through appraisal was approximately ten times the amount of damage as determined by the insurer’s adjuster. The insurer initially refused to pay the amount as determined by their own adjuster, and was later held liable to the insured for the amount as awarded through appraisal. Wilson v. Federated National Insurance Co., 969 So.2d 1133 (Fla. 2nd DCA 2007).

Court erred in confirming appraisal award where there was no judicial intervention in the appraisal process. Federated National Insurance Co. v. Esposito, 937 So.2d 199 (Fla. 4th DCA 2006).

Minnesota
Loss due to freezing of pipes; court held that determination of coverage by appraisers appointed by insured and insurer was not final. Mork v. Eureka-Security Fire & Marine Ins. Co., 230 Minn. 382, 42 N.W.2d 33 (Minn.Sup. Ct. 1950).

Pennsylvania
Insurer challenging appraisal award must file a petition to vacate or modify the award prior to its confirmation. Riley v. Farmers Fire Insurance Company, 735 A.2d 124 (Pa.Super 1999).

Appeal concerning appraisal award.

California
Judgments after appraisal not appealable where there were other causes of action unresolved. Rubin v. Western Mutual Ins., (1999) 71 Cal.App. 4th 1539, 84 Cal.Rptr. 2d 648.

Florida
Under Florida law, if an insurer and an insured go to appraisal, the insurer can only dispute coverage for the loss as a whole. Once an appraisal award has been made, the only defenses that remain for an insurer to assert are lack of coverage for entire claim or violation of one of the standard policy conditions (i.e. fraud, lack of notice, failure to cooperate, etc.). Three Palms Pointe, Inc. v. State Farm Fire & Casualty Co., 362 F.3d 1317 (11th Cir. 2004). Note: Three Palms Pointe was criticized by the 2d District Court of Appeal in Liberty American Insurance Co. v. Kennedy, 2005 Fla. App. LEXIS 74 (Fla. 2d DCA 2005).

Misperceptions About Appraisal.

We always lose.

Overpayment; or

No justification for award.

We completely relinquish control.

Retaining control; or

Preventing undue control.

If the insured demands it, the company is at a disadvantage.

The premature appraisal.

The unnecessary appraisal.

No disagreement; or

Mootness.