The appraisal provision of a Florida homeowners insurance policy offers a form of alternate dispute resolution that can be used to resolve an insurance claims dispute. During the appraisal process, the typical homeowners insurance policy will permit each party to select a “disinterested appraiser”. The question becomes what qualifies as disinterested. This issue often comes up in the context of insurance companies attempting to use an appraiser that gets the vast majority of his or her work from insurance carriers. However, a recent case addresses the definition of “disinterested” in the context of an appraiser used by a policyholder.
In the recent case of FIGA v. Branco, the Fifth District Court of Appeal for Florida provided criteria for evaluating whether a party to the appraisal process selected a “competent and disinterested appraiser” under the terms of the appraisal provision of an insurance policy. The homeowners suffered damage to their home that they alleged was caused by a sinkhole. The insured reported the loss to their insurer HomeWise Preferred Insurance Company. The insurer retained an engineering company to conduct a structural assessment. The carrier eventually denied the claim based on the opinion of the engineering firm that the damage was not caused by sinkhole activity.
The homeowners filed a lawsuit alleging breach of contract, and the insurance company responded by denying a breach based on the contention that the damage did not fall within coverage of the policy. FIGA succeeded the original insurance carrier after HomeWise declared insolvency. FIGA was joined to the lawsuit and determined that sinkhole activity was a factor in causing the damage after conducting an investigation. After determining the loss was partially attributable to sinkhole activity, FIGA conceded that the policyholders were entitled to the actual repair of the loss within policy limits.
Once the insurer admitted liability for the loss, the homeowners requested the court compel participation by the insurer in the appraisal process. The relevant appraisal provision provided that if the parties disagreed on the amount of the loss, either party could demand an appraisal of the loss with each party choosing a “competent and disinterested appraiser”. The policyholders selected their own attorney as its appraiser, but the insurer objected that the selection of the insured’s legal counsel did not constitute a disinterested party.
The court noted that disinterested is defined as “[f]ree from bias, prejudice or partiality; not having a pecuniary interest; a disinterested witness” along with other similar definitions. The court reasoned that the policy language clearly contemplates appraisers who are in fact not partial to either party. The court reasoned that a party’s attorney cannot be disinterested given the fiduciary duty of loyalty owed by attorneys toward their clients’ interest.
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