state farm farmers appraisal insurance

We’re no strangers to talking about appraisals or their “thorn in the side” status with various insurance companies.  We’ve also talked on the subject of insurance law and how some states, notably Florida, do not require insurance companies to include an appraisal clause in their policies.

Well here we go again.

In recent news, it seems that State Farm and Farmers Insurance have taken it upon themselves to revise their policies with some new rules for appraisals. Property Insurance Law Blog reported on this a few days ago, and as usual they’ve gone into an apt and detailed analysis of what this could mean for policy holders.

Chip Merlin, founder of Merlin Law Group, starts off noting a trend in the insurance industry.  It seems insurance companies have a strange habit of re-writing the language of their policies with newer jargon that isn’t established by case law and can confuse potential policy holders. This is apparently the problem with State Farm’s and Farmer’s revisions.

As a comparison, here is a typical appraisal clause:

If we and you disagree on the value of the property or the amount of the “loss,” either may make written demand for an appraisal of the “loss.” In this event, each party will select a competent and impartial appraiser. You and we must notify the other of the appraiser selected within twenty days of the written demand for appraisal. The two appraisers will select an umpire.

If the appraisers do not agree on the selection of an umpire within 15 days, they must request selection of an umpire by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and the amount of the “loss.” If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be the appraised value of the property or amount of “loss.” If you make a written demand for an appraisal of the “loss,” each party will:

a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire equally.

This is pretty simple and to the point, right? If there’s a disagreement, each side chooses an appraiser and those two appraisers agree on an umpire. Property gets checked and repair costs are run through a third un-biased party. Problem solved.

Well, the new revisions have unnecessarily complicated things. Here’s the Farmers one and the State Farm one. The Farmers one has extended what could be considered maybe half a page to four full pages and the State Farm one is two pages.

Whether these revisions were necessary remains to be seen, but more importantly, and as Chip notes “…the insurers are not writing the new language to help policyholders get full benefits paid quicker and sooner.”

What do you think? Were these revisions completely necessary or do the rules of appraisal need to be defined?