What am I appraising?

What Am I Appraising?

I began my appraisal career in Florida, in the aftermath of the record breaking 2004 – 2005 hurricane season. In my naïveté, I assumed that the appraisal process was for the purpose of reconciling differences in cost of repair, not the scope of the loss. Since that time, however, it has become apparent to me that regardless of the intent, it has primarily become a vehicle used to inflate what should have been a simple settlement of loss.

While I am regularly reminded to stay in my lane, i.e. the role of appraiser, I find that the majority of those I oppose use this same appraisal to add to and expand the appraisal with items that were never part of the original adjuster settlement. This means they are in fact operating in capacity as an adjuster, usually without the license and authority to do so.

So just exactly what is the appraiser authorized to do? Are we appraising the cost of repair, the scope of loss, or the desires of the insured? Are we impartial or working on an agenda? Do we work independently or are we functioning under unstated rules and expectations? Do we represent the carrier, the insured, or who?

The understanding I have always had was that the appraiser should be impartial and qualified, however I have come to realize both requirements are difficult to quantify and identify.

Regarding impartiality, I have observed that individuals I am in opposition with during an appraisal often do not sign the Declaration of Impartiality. This raises questions about their motivations. Similarly, I have noticed that appraisers representing the insured or contractor frequently either decline or are unable to produce their own position estimates, opting instead to adopt the demand estimate. This situation prompts me to question whether they are genuinely appraising or merely representing the interests of those who hired them.

I understand the pressure of what we do. Obviously, we want to continue to work, and we want our clients to continue to hire us to aid them in their settlements. The problem occurs, however, with whatever expectations we feel directed at us to ensure we continue to receive that work.

Our firm has historically worked under assignment from carriers. Fortunately, these clients have been more concerned with file expediency and communication protocols than they have with the outcome. However, it has become increasing apparent to me that those that I oppose do not have the same luxury. In the beginning, I foolishly assumed that my opponents operated under the same set of circumstances I did. Eventually I found this was far from true. Today before an award is signed, the opposition regularly tells me that they will have to first see if it is acceptable to their client.

They are checking to see if it is acceptable to their client… Does that mean that I should check with my client before I sign an award? Are we both simply agents of our respective clients, or are we supposed to be impartial and independent of those clients? If we are simply agents of our clients, why does the appraisal process exist anyway?

During my career, I have often wondered how the concepts of impartiality and capability can be measured. Is capability measured by mastering a software product or is it a real understanding of construction methods and processes? What is required to be able to appropriately determine repair or replace? Does wet constitute damage, what needs to be demolished and what needs to be refinished? How much influence should the contractor be allowed to have in the process and does the insured have the right to direct the inspection? Does impartiality only mean that the appraiser is not paid on a contingency, or does the promise of future employment put pressure on the appraiser for an expected result?

Recently when presenting our positions to a court ordered umpire, the opposing appraiser informed the umpire that they had dozens of files that they were going to be needing an umpire’s help with. It came as no surprise that the eventual award highly favored the behind-the-scenes manipulative ublic adjuster.

So, what am I supposed to be appraising? What does my assignment entail? Where does my assignment begin and what is it limited to, or are there really no restrictions and rules? Just exactly what is the extent of my authority as an appraiser? The longer I work in the appraisal under the policy environment, the more confused I have become about just exactly what the appraisal is supposed to accomplish.

Perhaps it is time to consider a change. Or, maybe not a change, perhaps a clarification.

Before the appraisal process becomes completely irrelevant through abuse, perhaps we could consider using a defined scope of appraisal. For example, when a roof replacement is being appraised should that appraisal be limited to that, or will we continue to allow post settlement additions, i.e. fence, garage door, or screening and gutters? If the adjuster, who is licensed to identify damage, sets the scope of loss, should we allow an appraiser, who is not, to add to that scope of loss?

On almost every file where I present coverage limitations the carrier has notified me of, I’m told: “We’re Not Adjusters – we’re appraisers! Stop trying to control the process”. While at the same time I am also being told by the opposing appraiser that the adjuster ‘missed’ something that needs to be added to the cope of loss. This begs the question, who is the one that is trying to be an adjuster?

At Johnson Dispute Resolution we struggle mightily with the concept of what is right. We are accused of being agents of the carrier while the opposition claims to be only protecting the rights of the insured. What we believe is that we represent neither. We state that we represent our position and that position only.

So, what does all this rant lead to?

I believe that it is becoming apparent that the time has come for impartiality to be proven and tested. I believe it is also time to make the entry into appraisal much more difficult and exhaustive. It is no longer appropriate to allow any, and all to appraise. There must be both defined qualifications and regular accountability if the process is to survive. So, who is qualified to build that system, or protocol?

To me the answer is obvious. The existence of appraisal is a function of the insuring agreement, Without the policy language creating the opportunity to exist, the appraisal process would have never been created. Therefore, I believe that it is the duty of the authors of the policy to appropriately define how the process is supposed to work and what authority is vested in the appraisal panel in bringing about resolution. As it currently stands it appears that the current process encourages litigation rather than limiting it.

Perhaps it is time to find a way to protect this important process rather than continuing to allow it to be abused.