While the Florida insurance appraisal process and the arbitration process both constitute forms of alternate dispute resolution (ADR), they serve very different functions. A decision by the Third District Court of Appeal recently reversed a trial court decision that invoked the Florida Arbitration Code in confirming an insurance appraisal award of a million dollars despite significant unresolved issues regarding coverage.
The Third District Court of Appeal in Citizens v. Mango Hill distinguished the appraisal and arbitration process under Florida law. The appellate court observed that the appraisal process is designed to address specific issues regarding the amount of loss and actual cash value. Because of the limited function of the appraisal process certain important procedures and formalities are disregarded. For example, an appraiser does not need to be under oath because of the limited purpose and scope of the appraisal process. The appraiser can act based on his or her independent knowledge and skill. The appraiser also is under no obligation to provide formal notice of his or her actions to the parties or attorneys. Frequently, appraisal agreements between the parties will even limit the scope of the appraisal process.
By contrast, the arbitration process is intended to provide a global disposition to all pending issues. The process also is subject to more formalities under the Florida Arbitration Code. Both parties are entitled to a comprehensive hearing on all issues in the presence of the opposing party unless this requirement is waived. Further, arbitrators are like judges in that they must rely on the presented evidence rather than independently discovered facts and information.
Citizens contended that the appraisal process did not address its coverage defenses. The insurer alleged that the insured failed to allow a full inspection by the insurer’s appraiser, refused to tender an amended sworn proof of loss after doubling the claim amount and declined to submit to an examination under oath. The insurance company argued that the appraisal award could not be enforced by the trial court like an arbitration award because the issue of coverage could not be resolved without addressing these defenses. If Citizens prevailed on the coverage defenses, it would not be obligated to pay the claim.
The appellate court sided with the insurance company that the appraisal award could not be confirmed by the court while coverage issues remained unresolved. The court indicated the appropriate process would be for the trial court to rule on the coverage defenses based on a motion for summary judgment or trial. In other words, the Florida Arbitration Code is not applicable to appraisal awards.
In short, the takeaway from the Mango Hill decision is that the appraisal process is not the proper venue for resolving disputed coverage issues. An appraisal award cannot be confirmed and enforced in the manner of an arbitration award if there are existing coverage disputes. Once such disputes have been resolved, then the court can confirm and enforce such an award.
If you are having problems getting your insurance carrier to pay your claim, you should seek prompt legal advice. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.