Morning post, Chip Merlin will be speaking on the hottest topics and fastest trends in property insurance claims assessment next Monday afternoon in the Motor City, may cause some readers to wonder about Michigan’s insurance law regarding appraisal. A quick search of this blog shows that it has been a decade since we wrote, Michigan Court, inspired by Florida case, rules in favor of policyholder and approves Public Adjuster in Appraisal Matter, Part IIon Michigan insurance assessments.
A relevant update on Michigan insurance assessment involves a federal case with State Farm and Michigan̵7;s standard fire policy.1 The court was concerned with State Farm’s policy language regarding appraisal, which differed from the statutory language of Michigan’s standard fire insurance policy. On this point, the court held that State Farm’s policy provisions must give way to Michigan’s statutory policy provisions:
With one exception, the assessment provisions relied on by the plaintiff violate MCL 500.2833(1)(m) and Void as Against Public Policy
As noted below, with one exception, the provisions of Policy Form HW-2122 cited by plaintiffs make the appraisal process far more burdensome than the Michigan legislature intended. As such, they are in violation of MCL 500.2833(1) (m) and void as contrary to public policy.
Interestingly, the decision confirmed that under the standard fire policy in Michigan, appraisers can be retained on a contingent fee agreement:
According to MCL 500.2833(1)(m), “the independent appraiser may be biased against the party employing and paying him, so long as he retains the ability to base his recommendation on his own judgment.”… An appraiser is not disqualified for has ‘previously served as [an] adjuster[ ].’ An appraiser is also not disqualified for having some financial interest in the outcome of the appraisal process. Looks White v. State Farm & Cas. Co., 293 Mich. App. 419, 809 NW2d 637 (2011) (noting that “appraisers in Michigan are not considered quasi-judges” and “hold[ing] that a contingency fee agreement does not prevent an appraiser from being “independent” under MCL 500.2833(1)(m)’). Accordingly, as applied to assessments, the above limitations in Policy Form HW-2122 are in violation of MCL 500.2833(1)(m) and are void.
This case will apparently be discussed in more detail next Monday and Tuesday at the IAUA event. I hope to see you there.
It is important to note that State Farm now has a specialized claims department that works with assessments. If you are involved in a State Farm assessment, you must read State Farm Operation Guide Regarding Appraisall. Another relevant post regarding State Farm’s assessment methodology is Why has State Farm stopped paying awards.
Afternoon thought about Michigan
Everything I’ve done in my career has started in and around Detroit, you know, the metro area and Michigan.
– Kid Rock
1 Hart v. State Farm Fire & Cas. Co.556 F.Supp.3d 735 (ED Mich. 2021).