Dan Luby of the Florida Insurance News forwarded an article to me, "United Property & Casualty Insurance Company Appraisal Clause." Dan does a fantastic job on relevant insurance news events in Florida and his piece today demonstrates the ongoing trend of appraisal clauses being removed from property insurance policies.
Significant is the reasoning provided by United Property & Casualty for removal of appraisal:
The Appraisal clause is being eliminated. We are taking this action because the current appraisal language, as it exists, does not give insurers recourse to meaningful judicial review. Furthermore, the basis of awards under Appraisal is outside the scrutiny of both policyholders and insurers.
Eliminating the appraisal clause will mean that our policy contracts will follow Mediation, which is the Florida Legislature’s preferred method of dispute resolution.
Interestingly, the Courts have approved appraisal as a means to keep the matter away from litigation. United Property seems to want a mechanism to get disputes into litigation.
I am not certain that mediation is preferred by the legislature. The legislature has enacted laws that demand that insurers fully investigate a loss and promptly pay claims for the full amount.
Certainly, if the insurers can get unwary policyholders into mediation without professional representation and threaten the potential of a lawsuit without the possibility of appraisal, insurers will gain "leverage" in the negotiation of a dispute because delay works to an insurer’s advantage. This is not what Florida legislators, except those politicians in the pockets of the insurers, want for Floridians.
Still, the trend is clear—appraisal is becoming less of an option. Many insurers are not happy with the results of appraisal and think our judicial system provides a better forum to fairly resolve disputes.