When your insurance company concedes liability for the cost of repair or replacement of your home, you can take advantage of the appraisal provision in your homeowners policy to obtain an objective valuation of the claim. The appraisal process can be a less costly and time consuming process for resolving disputes between policyholders and insurers regarding their respective estimates of the value of the loss. An increase in post-appraisal litigation has raised issues regarding the scope of issues that may be considered in such litigation.
Florida judges have answered this question by ruling that post-appraisal litigation must be limited to issues involving the face of the appraisal award. This means that the insurer and the policyholder cannot litigate underlying issues that are superfluous to the information contained in the appraisal award. This means that the scope of discovery also will be narrowly limited when courts litigate appraisal issues.
The case of First Protective Insurance Company v. Hess provides an example of the limits imposed on litigation of appraisal process issues. In Hess, the insurance company sought to have the appraisal award set aside. The insurer contended that the appraisal award included more money for certain types of loss than permitted under the policy. The insurance company specifically contended that the policy limited coverage for jewelry to $1,000 and that the appraisal award included more than $1,000 for this portion of the insured’s damage.
Because the appraisal award was vague regarding the allocation of specific monetary amounts for particular types of damage, the insurer tried to present evidence in the form of testimony from members of the appraisal panel. The court rejected this evidence based on the notion that the appraisal process is intended to be an alternative to litigation. Further, the court reasoned that the appraisal award is intended to be binding on both parties. The court justified its ruling by pointing out that allowing the court to go beyond the face of the appraisal award would undermine the appraisal process. The ultimate decision on the value of the loss is supposed to be within the purview of the appraisal process, and allowing the court to look beyond the four corners of the award would essentially eviscerate the benefits of the appraisal process.