Defining Occurrence – When Policy Definitions Do Not Apply To All Coverages
September 24, 2020
Appraisers are frequently involved in Florida property claims. Accordingly, Florida courts continue to refine the roles and limitations with respect to appraisers and the appraisal process as a whole. Florida’s Third District Court of Appeal recently held that a public adjuster who is in a contractual agent-principal relationship with the insureds cannot be a disinterested appraiser as a matter of law. State Farm Florida Ins. Co. v. Sanders, No. 3D19-927 (Fla. 3d DCA July 24, 2019).
In Sanders, the insureds filed suit against their insurer alleging breach of contract arising from a Hurricane Irma claim. The insurer responded to the complaint by filing a motion to invoke appraisal based on the appraisal provision of the insurance policy. This provision required each party to select a qualified, disinterested appraiser. The parties entered into an agreed order granting the motion to invoke appraisal. This order named the insurer’s appraiser and required the insureds to designate a qualified, disinterested appraiser. The insureds selected their public adjuster to serve as their appraiser.
The insureds and their public adjuster had entered into a contract that assigned 10 percent of the claim settlement to the public adjuster. The insurer moved the trial court to stay the appraisal, arguing that the public adjuster was not a disinterested appraiser. The insureds filed a motion to lift the stay and compel compliance with the order of appraisal. The trial court granted the motion to lift the stay and compelled appraisal.
The insurer subsequently filed a petition for a writ of certiorari. The Third District granted certiorari and held that the trial court erred in allowing the public adjuster to serve as an appraiser for the insureds. The Court relied upon the Fifth District’s holding that appraisals in Florida are creatures of contract, and their scope depends on the provisions of the contract. Fla. Ins. Guar. Ass’n v. Branco, 148 So. 3d 488, 491 (Fla. 5th DCA 2014). The Court held that the parties were free to contract to the terms governing the appraisal and the contract provision showed the parties’ clear intention to restrict the appraisers to “disinterested” persons.
The Court here also looked to Branco in defining a “disinterested” person as one not having a pecuniary interest or being free from selfish motives or interest. Id. at 496 n.9. In Branco, the insureds named one of their attorneys as an appraiser. The Fifth District held that if an appraiser owes its nominating party a fiduciary duty of loyalty, it creates too great a likelihood the appraiser will be incapable of rendering fair judgment. Id. at 494. Similarly, the Third District here noted the public adjuster stands to earn a 10 percent fee of whatever amount the insureds recover and thus cannot be disinterested.
The Sanders opinion is but the most recent example of Florida’s courts continuing to develop the law governing the roles and limitations of appraisers, public adjusters, and persons involved in property claims. Accordingly, insurers should continue to monitor the evolution of this topic as Florida’s courts continue to clarify and expound upon it.