Insurance Claims Personnel Must Control The Issues To Be Determined By Appraisal And Should Never Leave The Appraisers To Work On A Guess As To What They Were Asked To Determine

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Appraisal is a means of resolving an amount of loss and acts akin to an arbitration. What is to be appraised is a requirement of the parties to the appraisal. When an insurer’s appraiser – who valued the real estate only – was unaware that the insurer had paid the insured for its business personal property and fixtures loss, he signed an award that included a value for both the structure, the business personal property and the fixtures.

ZALMA OPINION

Although United Fire was able to receive a reversal of the tort and bad faith claims it still paid $122,000 more than it owed since the $122,000 was found by the appraisers – and paid after the award – to be the business personal property and fixtures loss that had been paid before the appraisal was conducted. Luigi’s got a windfall and if it was being totally fair the award should have been amended to be limited to the loss to the structure. United Fire, by its lack of attention sent its appraiser into an appraisal without enough information to provide a proper award. Insurance claims personnel must control the issues to be determined by appraisal and should never leave the appraisers to work on a guess as to what they were asked to determine.