Florida Supreme Court Finds Appraisers Cannot Have Pecuniary Interest in Outcome of Appraisal


homeowner insurance

By Jessica Cauley and Jonathan Schwartz

The Florida Supreme Court weighed in and resolved a conflict between district courts regarding appraised property claims and held that an insured’s public adjuster, who accepts an assignment on a contingent fee basis, is not a disinterested appraiser under a standard homeowners insurance policy. Parrish v. State Farm Florida Ins. Co., 2021 WL 601 4958 (Fla. Feb. 9, 2023).

State Farm’s homeowner’s policies offer appraisal as an alternative to litigation where the amount of loss is disputed. After Hurricane Irma in 2017, thousands of Floridians made property claims, including Jon Parrish under his State Farm Policy. However, he also retained a public adjusting firm for their services in maximizing the value of his claim. When the appraisal clause was invoked, he named one of the owners of the firm his public adjuster worked for as his chosen appraiser – State Farm objected. Namely, due to the public adjuster’s contingency agreement for 10% of whatever Mr. Parrish collected, he could not be “disinterested” as required under the policy.

Neither the subject insurance policy nor the Florida Insurance Code defined “disinterested” as anything other than its ordinary meaning. Consistent with its common usage, and after considering dictionary definitions, Florida statutes, and the context in which the term appears in the policy, the Florida Supreme Court reasoned that a person cannot be disinterested in a matter where they have a pecuniary interest. Thus, Mr. Parrish’s public adjuster could not serve as an appraiser for the property claim where the company stood to be compensated based on the claim’s outcome.

This decision impacts public appraisal firms, who can be major players in Florida’s homeowners’ insurance system. Insurers that utilize appraisal provisions in homeowners’ policies should carefully evaluate insureds’ selection of an appraiser, including the designated appraiser’s fee arrangement. In ensuring that appraisers lack an interest in manipulating the process’s outcome, the Florida Supreme Court has taken a step toward protecting the appraisal process so it yields more accurate claim valuations and produces less litigation.

Please contact Jessica Cauley, Jonathon Schwartz or your local FMG attorney with any questions.