This issue of appraisers talking to parties has been addressed in a number of recent appraisal classes. Jonathan Held’s 2n.d The edition of “The Appraisal Process: An Outline For Making Awards Useful and Final” has an answer to this question. I strongly encourage those active in the appraisal process and property insurance claims to read it. Jonathon Held is a leader in the property insurance industry. When he speaks, people should listen.
His paper advocates detailed assessment protocols depending on the complexity of the case. I certainly disagree with many of his views and suggestions. But I think the paper and the ideas are very much worth pondering and understanding.
The introduction to this article states:
Valuation is an often used and often maligned method of settling disputes in the property insurance world. Generally, adjudication is used for evaluation purposes only and will not provide finality to a claim where coverage, or, in some jurisdictions, causation is also disputed. Although the perceived advantages of adjudication versus litigation are that it is considered quick, inexpensive, and relatively final, the adjudication process is often criticized due to unpredictable awards that are not helpful in resolving a disputed claim and in some cases can lead to further protracted litigation . However, if a valuation is done with appropriate guidelines, the process can be valuable in getting final valuation disputes.
The following is intended to describe a process that will result in unequivocal awards. Regardless of the size or complexity of a disputed claim, the assessment process should always be handled in a thoughtful manner by the policyholder and insurer.
It is imperative that the disputed valuations of the loss be clearly and unambiguously communicated to and understood by the valuers and adjudicators (appraisal panel) who will decide the matter. It is equally important that the valuation award is reported in such a way as to ensure the finality of the valuation dispute.
Laws or statutes governing assessment vary by jurisdiction and are not addressed here. Questions regarding timeliness or enforceability of assessment, disinterest of an appraiser or judge, procedure for conducting the assessment, reporting or enforceability of a judgment, etc., should always be reviewed by counsel when appropriate. The purpose of this article is to provide parties in the assessment process with an overview of issues to consider. The intent of the process is to produce a useful outcome, one that ends a dispute regarding the value of a loss.
I can̵7;t tell you how much that last sentence resonates with me except for the last six words. I wish the assessment concluded the dispute. If litigation is required after the assessment, why not just file the litigation to complete everything instead of dragging it out in two processes? From that perspective, arbitration can address both coverage and valuation issues, although policyholders lose their right to a jury trial during either valuation or arbitration.
Another concern is that the number and complexity of the detailed protocols will simply lead to more litigation. For example, a protocol requires the valuation procedure to be recorded. I can guarantee that something will be said that someone will take issue with after the award is entered. Can you imagine if we recorded jurors during their deliberations?
In terms of communication, a protocol is listed as follows:
Neither the insurer, the insured nor their respective agents shall have any ex parte communication with the judge or with the opposing party’s appraiser. The appraisers should not have any ex parte communication with the referee. Valuing insurance companies and their representatives can communicate ex parte with Appraising Insurers’ valuer, and the policyholders and their representatives can communicate ex parte with the policyholders’ valuer.
Held and I agree on one point: Appraisers need information from the parties if the goal is to get all the information to arrive at a correct result. Appraisers should speak to the parties.
The courts of this country should not be the places where the resolution of disputes begins. They should be the places where disputes end after alternative dispute resolution methods have been considered and tried.
—Sandra Day O’Connor