03 Jul Residential Policyholders Struggling
Residential Policyholders Struggling to Rely on Appraisal in Illinois
In my last post, I discussed what residential policyholders can do to keep the appraisal process fair. Given insurance carrier response to recent Illinois federal court case law, this is even more critical. In 2017, an Illinois federal district court ruled that disputes as to causation were appropriate for appraisal.Runaway Bay Condo. Association. Philadelphia Indem. Ins. Cos., 2017 WL 1478114 (N.D. Ill. April 25, 2017). This case has largely been viewed as a victory for commercial policyholders because it affords them the opportunity to have their entire dispute resolved through appraisal, rather than litigation.
For residential policyholders, however, this broad view can often work as a determinant. More often than not, residential policyholders invoke appraisal when their carrier has already extended coverage for certain damaged items, but is refusing to pay for the full scope of repair. In this common situation, it is to the residential policyholder’s benefit to limit the appraisal to scope and price for damages already agreed to. Unfortunately carriers, undoubtedly relying on Runaway Bay, have become more aggressive in using appraisal to walk back coverage that has already been extended. This is often done by naming preferred carrier engineers as appraisers, who then submit award sheets lower than what the carrier has already agreed to pay. While the engineer/appraiser’s position maybe baseless, it puts the residential policyholder in the precarious position of having to pay to retain the services of their own engineer, which defeats the purpose of the appraisal process altogether. In other words, appraisal simply becomes another tool for carriers to shift the risk of the loss back to their policyholders.
I remain a firm believer that appraisal is the best tool residential policyholders have to have their claims resolved efficiently and cost-effectively. The recent trends we are seeing just mean more work needs to be done on the front-end to assure that this process is a fair one.