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Property Law
Tactic #2: Public Adjuster Citing Law
Frequently, public adjusters are using the tactic of citing law in its correspondence to the adjuster, citing to a state’s bad faith statute or unfair claims settlement practice act or case law. Because a public adjuster likely is not a licensed attorney, and because the insured is copied on those communications, a carrier should request that a public adjuster confirm whether a licensed attorney. For an example, a carrier might write back:
I see that you have quoted various statutes and case law in your recent communication. A quick search of the state bar’s website does not show that you are a licensed attorney in this state. If you are, please provide your state bar number, and we will have our attorney contact you do discuss this claim.
In the cases in which a response has been provided either by my office or the carrier, the public adjuster has ceased citing case law in all subsequent correspondence.
Tactic #3: Invoking Appraisal Without Providing An Estimate of Damage
Invoking appraisal is increasingly becoming the normal in first party property claim. The public adjuster is invoking appraisal immediately after being retained by an insured and before providing any estimate showing that the carrier’s estimate is not correct. While appraisal is a method by which the carrier and its insured has agreed to resolve the amount of loss, appraisal is only appropriate if the parties “fail to agree” on the amount of loss. Until there is a disagreement, invoking appraisal is premature.
In response to an appraisal where neither the insured, a contractor or the public adjuster has submitted an estimate that differs from the adjuster’s estimate, the adjuster should sent correspondence to the public adjuster and the insured confirming receipt of the appraisal demand. The adjuster should also advise that no information has been received by the insured or the public adjuster showing the areas of disagreement with the carrier’s estimate, and until such areas have been confirmed and evaluated for possible resolution, the appraisal demand is premature. In response, public adjusters generally provide an estimate that is considerably higher than the carrier’s estimate. The carrier can then determine whether there is a dispute regarding the amount of loss or scope of damages, which brings us to Tactic #4 below.
Tactic #4: Attempting to Appraise Scope of Damages
What can be the subject of an appraisal in a first party property claim differs from state to state. Therefore, it is important to review the appraisal demand and the estimate submitted to ensure the scope of appraisal sought by the public adjuster is valid.
For example, in Georgia, appraisal can only resolve a disputed issue of value. It cannot be invoked to resolve the broader issues of liability. See Lam v. Allstate Indemnity Co., 2014 WL 1228118 (Ga Ct. App. Mar. 26, 2014). Public adjusters in Georgia frequently seek appraisal of the cost of replacing the entire roof in claims in which the carrier has determined that only a limited number of shingles have been damaged by a covered loss, and that those shingles can be repaired. In Lam, the insurer had conceded that four shingles had sustained covered damage and agreed to replace those four shingles. The insured, however, sought coverage for the complete replace of all shingles on the roof. The Georgia Court of Appeals held that the parties’ disagreement was over coverage, which is not a proper basis for an appraisal, where the dispute was not over the value, but scope of covered damaged.
If the carrier confirms that the issue is one of coverage, not amount of the loss, the carrier has a couple of options. First, the carrier could deny coverage for any disputed damage, and agree to appraise the cost of the undisputed damage. Second, the carrier could propose a memorandum of appraisal detailing what
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FDCC ANNUAL INSIGHTS 2023