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Does the assessment process violate the Constitution? | Property Insurance Law Team Blog



Happy Father’s Day!

Pablo Caceres is an experienced insurance defense lawyer from a very reputable law firm who has raised the issue of whether the assessment process violates the Constitution. In response to a lawsuit from a condominium seeking to enforce the appraisal provision, Caceres made the following argument on behalf of its client, Empire Indemnity Insurance Company:

Empire denied coverage for roofs, windows and doors and the individual roofs, windows and doors completely denied by Empire should not be subject to assessment, otherwise the assessment would incorrectly determine whether Empire infringed by refusing coverage. Allowing the arbitrators, who are not subject to any arbitration code, to rule that the Empire had covered roofs, windows and doors claimed to be damaged would be tantamount to a decision by the arbitrators that the Empire violated coverage, which wrongly dismissed this court of jurisdiction to determine the Empire infringed. and deprive the Empire of Due Process and the right to a jury trial under the United States Constitution.

The crazy thing about the position is that Empire Indemnity wrote the assessment clause in the policy. Empire Indemnity has gone to judgment without arbitration or a formal process in many judgments long before this policy was written. So I do not know how much of an argument in good faith this can really be of Empire Indemnity.

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7;s even crazier is that when I talk about the assessment clause and the process, I have raised the same issue. There are no set rules. Judgment can be likened to a “kangaroo court”. However, there is no case that I am aware of that says that the process violates the US Constitution.

A federal court judge did not agree with Empire Indemnity and decided that the case should be considered:

Empire argues that if it is forced to adjudicate, the court should impose certain minimum guidelines … to ensure that the parties receive legal protection. The court has previously denied requests to introduce guidelines for the assessment process because no policy language requires such a form, and the court relies on that series of cases here … Although Empire does not request such a specific form, Judge McCoy recommends — based on a reading of the policy as a whole – that the assessment panel should issue an award that delimits the specific coverages offered under the policy for each unique building. (Doc. 53 at 26). Since the Court sees no objection to this recommendation, the Court only needs to correct a pure error required in the interests of justice …

Empire Indemnity is not happy with that result and has appealed. It again addresses the constitutional issue of proper process:

Relatedly, the “due process clause requires certain minimum procedures” to ensure this [a property interest] is not arbitrarily repealed. ” Smith against the organization of foster families for equality and reform431 U.S. 816, 859 (1977) (Stewart, J., assent) (internal citations and citations omitted) (emphasis added). “[T]hat minimum is any reasonable procedure. . . which fairly protects. . . from arbitrary acts. ” Burgess vs. Miller, 492 F.Supp. 1284, 1290 (ND Fla. 1980).

Government measures that require assessment involve a correct process. Looks, for example, Hardware Trader’s Mut. Fire Ins. Co. of Wis. v. Glidden Co., 284 US 151, 158 (1931) (maintains the constitutionality of laws requiring insurance assessments only if “procedure which it adopts meets the constitutional requirements of reasonable notice and the possibility of being heard”). Judicial enforcement is no different. Courts have long required judgment to respect minimal litigation despite its informality. Looks, for example, Providence Washington Ins. Co. v. Gulinson215 S. 154, 155 (Col. 1923) (reverse valuation award because “[a]arbitrators constitute an almost court, and although no formalities are necessary, but some. . . duties and responsibilities are similar ”) …

Frankly, Empire could have cited precedents from some states where witnesses are called and evidence presented if a party demands. But it’s not the current law in Florida, where the procedure is informal and not as arbitration.

For readers with little time, it’s worth reading Empire Indemnity’s response, the trial decision and Empire Indemnity’s first appellate letter. There are more issues than just the argument about constitutionally just process being addressed.

From the policyholder’s perspective, these procedural objections and litigation remove the quick and relatively inexpensive assessment objectives. There is a trend for insurance companies to address these issues whenever the stakes are high. If the stakes are low, they simply agree to the simple procedure and never address these issues. If this trend continues, we may see a day when some insurance companies set monetary limits for which receivables are assessed.

In terms of fairness and due process, the Windstorm Insurance Network is to be congratulated for starting training courses leading to certifications that include fairness and a code of ethics in the assessment process. The Insurance Appraisal and Umpire Association also has an excellent certification program with its own code of ethics.

Today’s thoughts

I can not imagine any need in childhood as strong as the need for a father’s protection.
—Sigmund Freud


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