Appraisal panels have few rules to follow about what they can and cannot take into account when determining the amount of loss. In a recently decided case,1 a policyholder refused to proceed in an assessment because the panel was presented with evidence of a subsequent loss. The policyholder argued that this contravened the valuation agreement.
The Court of Appeal considered:
On appeal, Guzy concedes that “measuring the amount of the covered loss alone required intentional knowledge of and exclusion of the other loss.” Nonetheless, Guzy argues that the appraisal agreement “prohibited”; consideration of the second loss evidence. Guzy’s position appears to be that the appraisal agreement both required the appraisal process to separate the harm caused by the two losses and prohibited consideration of the second loss altogether.
We disagree with this absurd result. The Appraisal Agreement requires that the “Appraisal Award” shall not take into account damage caused by other events. As a matter of logic, to ensure that the award covered only damage caused by the November 2016 leak, the assessment process must necessarily consider other possible causes of the claimed damage. As a matter of law, the Florida Supreme Court has stated that “an assessment of the amount of a loss” necessarily includes a determination “whether the claim for repair or replacement was caused by a covered peril or a cause that was not covered.’ State Farm Fire & Cas. Co. v. Licea, 685 So. 2d 1285, 1288 (Fla. 1996). Guzy’s reading of the appraisal agreement violates this basic principle and is implausible.
Thus, the Valuation Agreement required the appraisal process to determine the extent of the damage caused by the November 2016 loss, rather than any subsequent loss event….
This makes sense to me. Why should the panel award damages for events that occurred before or after the subject of assessment?
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1 Guzy v. QBE Specialty Ins. Co.No. 22-cv-10668 (11Th Cir. 2 February 2023).