What Is Appraisal And Do I Have To Participate In It?
Often times, it is important to use alternative dispute resolution vehicles to try to settle claims, instead of being forced to file suit or be subject to the “Appraisal” process.
In many insurance policies, there is an “Appraisal” provision that generally favors the insurance company by allowing it to avoid litigation and force a more informal arbitration-like process where they get to choose their own judge (and you choose your own and they meet and if they cannot agree on an amount, a third judge referee is appointed to make the final decision, a process that generally favors the insured). In order to prohibit insurance companies from failing to give the homeowner the proper right to mediation, Fla. Stat. 627.7015(7) provides that the insurer waives its right to force an appraisal if they fail to give the right notice to you. In other words, so you have the right to have your claim immediately reviewed by the insurance company (even before litigation is commenced against them), you are entitled to receive notice that you can participate in a process called Mediation, which is an informal meeting between the parties to determine whether the claim can be resolved without further litigation.
In order to assure that the insurance companies give the homeowner his/her right to immediate relief, the Legislature enacted Fla. Stat. 627.7015, which mandates that the insurance company give written notice of your right to mediation and provides for penalties against the insurance company if they fail to follow the law. More particularly, Fla. Stat. 627.7015(2), which provides:
At the time a first-party claim within the scope of this section is filed, the insurer shall notify all first-party claimants of their right to participate in the mediation program under this section. The department shall prepare a consumer information pamphlet for distribution to persons participating in mediation under this section.
It further provides that if the insurer does not provide such notification or if the insurer requests the mediation and the mediation results are rejected by either party, the policyholder is not required to submit to or participate in any contractual loss appraisal process of the property loss damage as a precondition to legal action for breach of contract against the insurer for its failure to pay the policyholder’s claims covered by the policy.
For purposes of this section, the term “claim” refers to any dispute between an insurer and a policyholder relating to a material issue of fact other than a dispute:
- With respect to which the insurer has a reasonable basis to suspect fraud;
- Where based on agreed-upon facts as to the cause of loss, there is no coverage under the policy;
- With respect to which the insurer has a reasonable basis to believe that the policyholder has intentionally made a material misrepresentation of fact which is relevant to the claim, and the entire request for payment of a loss has been denied on the basis of the material misrepresentation;
- With respect to which the amount in controversy is less than $500 unless the parties agree to mediate a dispute involving a lesser amount; or
- With respect to a windstorm or hurricane loss that does not comply with s. 627.70132.
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