Policyholders coping with property injury count on insurance coverage claims to be dealt with pretty and effectively. But, the truth can diverge as a consequence of delays within the insurance coverage appraisal course of. This raises an essential query: What function do insurance coverage carriers play in these delays, and have they got an obligation to forestall them?
The Appraisal Course of and Its Challenges
Policyholders coping with property injury typically 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 typically have most popular appraisers and should disproportionately assign value determinations to those favorites, which might result in backlogs and delays within the course of.
Primarily based 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. One of these conduct considerably slows down the claims course of, resulting in protracted timelines for assessing damages and irritating delays that considerably affect a policyholder’s potential to rebuild and get better. These delays may jeopardize policyholders’ rights and advantages.
Notably, state rules 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 go with out motion, equivalent 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 Duties
This leads us to think about whether or not insurance coverage corporations 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 as a consequence of an appraiser’s repeated unavailability or inefficiency throughout a number of claims, the provider ought to take decisive actions to handle the state of affairs and uphold their obligation of fine religion and truthful dealing. On the outset, the provider ought to overview its total record 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 contains 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 know 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 popularity and reduces the danger of authorized challenges.
Extra Steps Insurers Ought to Take:
- Proactive Communication About Delays: Insurers ought to implement processes to tell policyholders about any potential delays attributable to their appraisers as quickly as they turn out to be obvious. This communication needs to be clear, clear, and documented to keep away from misunderstandings about important timelines.
- Computerized Extension of Deadlines: Insurers ought to mechanically lengthen 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 so on.
- Compensation for Bills: If delays result in further affordable bills for the insured, insurers needs to be ready to compensate these.
- Recusal: If a provider appraiser’s schedule will trigger important delays, insurers ought to require recusal and a direct appointment of one other certified appraiser who can keep the integrity of the appraisal course of.
- Avoidance of Gamesmanship: Insurers have to keep away from any practices that could possibly be interpreted as unfair or misleading. This contains 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. Due to this fact, insurers ought to take affordable steps to forestall these delays and make sure the appraisal course of aids reasonably than hinders the restoration of policyholders. Day-after-day of delay is one other day a policyholder can not transfer ahead with rebuilding their life—an consequence that no truthful and moral insurer ought to enable.
Thought for the day:
Do one of the best you may 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 Fireplace & 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).