Feb
13 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, shows how an independent appraiser and the appraisal process protected a policyholder from severe insurance company mistakes. Each case can be a little different depending upon how the appraisal clause is worded in the contract, the type of damage, and all the facts pertaining to the loss.
JM Walker owned and insured five buildings in North Richland Hills, Texas. A severe hailstorm caused damage to the roofs on each of the five buildings. Mr. Walker submitted his claim to his insurance company, Acadia. At first Acadia denied payment on the claim after their adjuster inspected the roofs. The adjuster determined that the roofs had minimal hail damage and did not need to be fully replaced. This assessment resulted in non-payment because the adjuster’s estimate was under the $5,000 deductible that applied to the policy.
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.
In appraisal, each party hires an independent appraiser and then there is an appraisal umpire. If the two independent appraisers cannot agree on an amount they submit their differences to the umpire. The umpire in this appraisal produced an award in the amount of $423,053.96 for Mr. Walker. Being that appraisal awards are binding, Acadia had to pay that amount. (May I remind you that Acadia’s first offer was $0. They determined the loss to be below his $5,000 deductible.)
JM Walker filed an appeal in the United States Fifth Circuit. Walker believed he was entitled to more insurance proceeds for his damages, plus was seeking additional monies for which he believed was “bad faith” conduct by Acadia and their poor handling of the claim.
The Court stated 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 stated that an otherwise binding appraisal may only be disregarded in 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.
If you should ever find yourself in an insurance claim dispute with your insurance company, you should truly consider calling an Independent Appraiser to explore your options with the insurance appraisal process. Independent Insurance Appraisal Services is all we do. Feel free to call Insurance Claims Group, Inc. at 919-669-9111 to have all your insurance appraisal questions answered at NO COST. (C) Joseph 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.fireinsuranceclaims.net
