Delayed Insurance coverage Value determinations? Do Insurance coverage Corporations Have Good Religion Duties to Make Certain Their Appraisers Do Not Delay Value determinations?

Policyholders coping with property injury count on insurance coverage claims to be dealt with pretty and effectively. But, the truth can diverge because of delays within the insurance coverage appraisal course of. This raises an vital query: What function do insurance coverage carriers play in these delays, and have they got an obligation to stop them?

The Appraisal Course of and Its Challenges

Policyholders coping with property injury usually invoke the insurance coverage coverage’s appraisal clause to settle disputes over the scope of damages. When the coverage’s appraisal clause is triggered, the provider and the insured every rent their very own appraiser to research and estimate the damages. Insurance coverage carriers usually have most popular appraisers and should disproportionately assign value determinations to those favorites, which might result in backlogs and delays within the course of.

Based mostly on my expertise as a former insurance coverage appraiser, I’ve seen firsthand how overloaded provider appraisers could be unavailable to attend a joint inspection for a number of weeks or months or in any other case delay finalizing their positions. This sort of conduct considerably slows down the claims course of, resulting in protracted timelines for assessing damages and irritating delays that considerably influence a policyholder’s potential to rebuild and get better. These delays may also jeopardize policyholders’ rights and advantages.

Notably, state laws usually don’t mandate particular timelines for finishing insurance coverage value determinations, leaving a lot of the method on the discretion of the insurance coverage carriers who draft the insurance policies. Whereas typical insurance coverage insurance policies embody deadlines requiring the insurer to promptly identify its appraiser, they seldom set particular timelines for finishing the appraisal itself.

Furthermore, courts in lots of jurisdictions have dominated that initiating an appraisal doesn’t pause coverage deadlines or statutes of limitations. ¹ Consequently, if these deadlines move with out motion, comparable to submitting a lawsuit, policyholders may forfeit their rights or advantages awarded throughout appraisal. In lots of circumstances, this necessitates hiring authorized counsel to guard their pursuits, including additional expense and complexity.

The Insurance coverage Provider’s Position and Obligations

This leads us to contemplate whether or not insurance coverage firms have an obligation to make sure their appraisers full their obligations in a well timed method.

My view is that when an insurance coverage provider faces constant delays within the appraisal course of because of an appraiser’s repeated unavailability or inefficiency throughout a number of claims, the provider ought to take decisive actions to deal with the scenario and uphold their obligation of fine religion and truthful dealing. On the outset, the provider ought to overview its general checklist of appraisers to make sure there’s a adequate variety of certified professionals out there to deal with value determinations in a well timed method. This overview consists of monitoring the timelines concerned with the appraiser’s work historical past for the provider. If the provider decides to proceed with an appraiser, they need to focus on patterns of delays with the appraiser to grasp the underlying causes and set up expectations for timeliness. By implementing such overview processes, an insurance coverage provider not solely adheres to its obligations of fine religion and truthful dealing but in addition improves its fame and reduces the danger of authorized challenges.

Further Steps Insurers Ought to Take:

1. Proactive Communication About Delays: Insurers ought to implement processes to tell policyholders about any potential delays brought on by their appraisers as quickly as they change into obvious. This communication needs to be clear, clear, and documented to keep away from misunderstandings about vital timelines.
2. Computerized Extension of Deadlines: Insurers ought to routinely prolong related coverage deadlines impacted by these delays. This could embody extensions for any related lack of use, restoration of withheld depreciation, submitting claims and lawsuits, and many others.
3. Compensation for Bills: If delays result in further cheap bills for the insured, insurers needs to be ready to compensate these.
4. Recusal: If a provider appraiser’s schedule will trigger important delays, insurers ought to require recusal and an instantaneous appointment of one other certified appraiser who can keep the integrity of the appraisal course of.
5. Avoidance of Gamesmanship: Insurers have to keep away from any practices that may very well be interpreted as unfair or misleading. This consists of undue delays in communication or withholding essential details about the rights of the insured and the standing of their declare.

For insurance coverage carriers, permitting appraisal delays to proceed unchecked violates the ideas of fine religion and truthful dealing. Subsequently, insurers ought to take cheap steps to stop these delays and make sure the appraisal course of aids quite than hinders the restoration of policyholders. On daily basis of delay is one other day a policyholder can not transfer ahead with rebuilding their life—an end result that no truthful and moral insurer ought to enable.

Thought for the day:

Do one of the best you’ll be able to till you already know higher. Then when you already know higher, do higher.
—Maya Angelou, American poet and civil rights activist

¹ See e.g., Stolz v. State Farm Hearth & Cas. Co., 2013 WL 3168176, at *6 (S.D. Miss. June 20, 2013); Ireifej v. Vacationers Cas. Ins. Co. of Am., 2021 WL 4133948, at *3 (M.D. N.C. Sept. 10, 2021); Mireles v. Liberty Ins. Corp., 2023 WL 349010, at *1 (W.D. Okla. Jan. 20, 2023).