I hope you are doing well. I have a client who invoked appraisal when we could not reach an agreement with the insured's carrier, State Farm. The appraisal process led to an award of an amount greater than $6,539.95. State Farm had the award revised, as the signed award accidentally led to an overage on overhead and profit for a certain line item. Once the award was revised, State Farm issued a $6,539.95 appraisal payment.
Subsequently, the insured's appraiser noted another error on the signed award and proposed a revision that led to a revised award being signed by the insured's appraiser and by the umpire. The revised award increased the scope of work via the addition of two line items allowing for the removal and replacement of the insured's air handlers- the revised award, if paid, would lead to a supplemental $5,932.36 payment.
State Farm is asserting that it does not owe for the $5,932.36 revised award payment via State Farm's following statement:
"State Farm paid the original appraisal signed by Mr. Settles and Mr. Belcher for the appraisal award less the overhead & profit that was added in error. The original appraisal was corrected by the umpire and our appraiser, Mr. Warren Dennis, to reflect the removal of the duplicate overhead & profit amount. This error was communicated to Mr. Belcher, and he advised to correct the appraisal award and notify you, the insured, of the error.
The new revised appraisal award was submitted on February 8, 2024, which was signed by Mr. Dennis and Mr. Settles. Again, the only thing that changed was the removal of the overhead & profit amount that was entered twice. The overall agreed scope of damage awarded in through the appraisal was never changed.
After properly deducting any amounts that were previously paid in the State Farm estimate, the calculated appraisal award to be paid was $6,539.95. A payment for this amount was issued on February 19, 2024.
State Farm has adhered to the scope of the appraisal award as it was originally signed by Mr. Settles and Mr. Belcher. Therefore, our decision remains unchanged in our adherence to the original appraisal award scope and no additional payment will be issued."
I have attached a copy of State Farm's appraisal language. It is my understanding that appraisal awards can always be revised by the appraisal panel if an accident or mistake was made when an award was initially signed. It appears that there is also no language contained in State Farm's appraisal policy language that would bar revision of a signed award via accident or mistake.
Further, I do not see how State Farm can refuse to pay the revised appraisal award when State Farm had the initial award revised due to an error. It does not seem reasonable for an appraisal award to be revised when it is to State Farm's benefit, but the award is not eligible for revision when it is to the insured's benefit. Please let me know your thoughts on this matter. Thank you.
Texas Subscriber
There is no reason why if State Farm accepted an adjusted appraisal once that they shouldn't accept an adjusted appraisal a second time. Any agreement between two appraisers or an appraiser and an umpire is binding on both the insured and the company. There is nothing in policy language that states that appraisals can't be modified, nor can we find anything in statute regarding the same.
If the second revision to the appraisal is regarding something that was not on the first appraisal at all, it might be better to submit a second request for appraisal with the new information. I can see how the addition of new information after the first appraisal had been completed could be seen as unfair as the insurer's appraiser never saw that particular information. Otherwise, you could direct the issue to the insurance department for guidance.