Home Insurance Law Does an Appraiser Have To Be Neutral? What Does That Imply?

Does an Appraiser Have To Be Neutral? What Does That Imply?

Does an Appraiser Have To Be Neutral? What Does That Imply?


Bob Norton and Steve Badger

Steve Badger and yours really substituted for appraisal educator Bob Norton ultimately week’s Insurance coverage Appraisal and Umpire Affiliation certification course. One of many funnier facets of the course is after we ask these sitting for the certification check whether or not the reply to a selected hypothetical is “sure” or “no.”  The best reply is usually “it relies upon” as a result of some states rule a technique and others rule one other.  

Whereas we had been educating the course, a Kansas federal decide decided concerning an insurer’s movement to disqualify the policyholder’s appraiser primarily based on the dearth of impartiality.1 As with most points involving insurance coverage, step one is to learn the insurance coverage coverage. The federal decide famous that the appraisal clause acknowledged, partly:

If we and also you disagree on the quantity of loss, both could make written demand for an appraisal of the loss. On this occasion, every social gathering will choose a reliable and neutral appraiser….

The court docket then famous the insurer’s foundation for the appraiser’s disqualification:

Defendant seeks disqualification of Plaintiff’s chosen appraiser, Jeremy Cannefax, difficult his impartiality primarily based upon his alleged alignment with Wichita House Specialists (“WHS”), the contractor whose estimate kinds the premise for Plaintiff’s damages declare. Defendant argues Mr. Cannefax has refused to be absolutely clear regarding his relationship with WHS, although his feedback on the WHS Fb web page clearly present there’s a shut and ongoing relationship. Defendant additional argues Mr. Cannefax’s posts on the WHS Fb web page emphasize the overall pro-insured/anti-insurer advocacy prevalent on that web page. Defendant’s movement is well-supported. Hooked up to the movement is the detailed Affidavit of its Area Crew Supervisor, Kent Garretson, together with 9 reveals (WHS’s contract for companies with Plaintiff and its estimate, Plaintiff’s proof of loss, Mr. Garretson’s correspondence to Plaintiff, the Fb posts Mr. Cannefax made on WHS’s web page, and Mr. Cannefax’s e mail and ‘Declaration of Impartiality’).

It is very important be aware that the policyholder’s lawyer failed to reply to or rebut the insurer’s affidavits. Accordingly, the court docket accepted them as true and famous the premise for the ruling:

The Court docket finds that the fabric info set forth in Defendant’s movement—which Plaintiff has not disputed—set up on their face that Jeremy Cannefax, Plaintiff’s chosen appraiser, just isn’t neutral as required by the Insurance coverage Coverage. Mr. Garretson, who’s liable for dealing with Plaintiff’s declare, states in his Affidavit that he carried out due diligence by on-line analysis concerning Mr. Cannefax, in accordance with the requirement of the Coverage, to find out whether or not Mr. Cannefax is “competent and neutral.” Throughout his analysis, Mr. Garretson accessed WHS’s Fb web page and found that Mr. Cannefax made a number of posts on that web page that Mr. Garretson thought of to be indicative of a relationship between Mr. Cannefax and WHS, in addition to a scarcity of impartiality on the a part of Mr. Cannefax. Defendant has thus proven that Mr. Cannefax has some kind of relationship with WHS by these Fb posts. No rebuttal is obtainable by Plaintiff.

Mr. Garretson additional states in his Affidavit that he despatched a letter to Plaintiff on July 14, 2023, asking for detailed data in regards to the extent of any monetary relationship with WHS and any monetary curiosity Mr. Cannefax might need within the consequence of the appraisal and, particularly, any settlement for compensation he might need with WHS. Mr. Cannefax responded by e mail on July 19, 2023, stating that he thought the request for his ‘funds’ was ‘unreasonable’ and attaching his ‘Declaration of Impartiality’ on the stationery of an organization named ‘Blue Chip Consulting, Inc.’ The Court docket agrees with Defendant that Mr. Cannefax’s response is unpersuasive; he didn’t point out WHS or elucidate on the apparently shut relationship he has with that firm as demonstrated by his a number of posts on its Fb web page. Furthermore, it’s telling that Plaintiff by no means filed a response on this case making any arguments primarily based upon Mr. Cannefax’s July 19, 2023 e mail or his ‘Declaration of Impartiality.’

… the Court docket finds Defendant has sufficiently established that Plaintiff’s chosen appraiser must be disqualified as a result of he’s not neutral as required by the Insurance coverage Coverage on this case.

In the course of the IAUA course, I made the commentary that the development is to disqualify appraisers the place the appraisal clause requires impartiality and the proposed appraisers labored on the declare or have work with the corporate making estimates on the declare. Judges will are inclined to approve of appraisers not having a pre-conceived opinion primarily based on prior work on the declare.

Steve Badger identified that appraisers and umpires must be cautious about what they write on social media. Boasting about “profitable” an appraisal or acquiring larger or decrease awards in ads or social media merely exhibits bias or impartiality. It’s important that this federal decide discovered the Fb posts to be related proof, as Badger warned within the IAUA course.

For a Colorado perspective of impartiality, I recommend studying Appraisal and the Impartiality of Appraisers. For the Texas perspective, I’d recommend “Pissing In The Wind” Remark Disqualifies Appraiser From Appraisal Panel, and Texas Court docket Finds That Appraiser Does Not Should Be Neutral If Coverage Does Not Require Impartiality. For a Tennessee perspective, please go to Neutral Appraisers and Public Insurance coverage AdjustersOnce more, states have totally different views on the problem, and the panel to an appraisal must know the state regulation that applies to an appraisal.

I at all times study rather a lot from the IAUA viewers questions. The IAUA is closing in on having over 1000 members. My hat is off to Bob Norton, previous IAUA presidents, and all of the Board members who’ve labored so laborious to construct this profitable group.

Thought For The Day  

Justice can’t be for one aspect alone, however should be for each.

—Eleanor Roosevelt

1 L & M Auto Restore v. Federated Mut. Ins. Co., No. 6:23cv01203 (D. Kan. Jan. 17, 2024).



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