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Insurance Journal

Public Adjusters Can’t Also Be Appraisers on the Claim, Florida Supreme Court Finds

By Jim Sams | February 10, 2023

A public adjuster cannot act as an appraiser for a homeowner they represent when the insurance policy specifies that the appraiser must be “disinterested,” the Florida Supreme Court ruled Thursday.

The high court affirmed a 2nd District Court of Appeal decision in a lawsuit filed by Jon Douglas Parrish against State Farm Insurance Co. over damages suffered during Hurricane Irma. Parrish wanted to use the chief executive officer of the public adjusting company he hired for his insurance claim to act as an appraiser to resolve a dispute with State Farm Florida Insurance Co.

“Finding no way around the plain meaning of the word ‘disinterested,’ we approve the 2nd District’s decision below and hold that an appraiser cannot be ‘disinterested’ if he or she, or a firm in which he or she has an interest, is to be compensated for services as a public adjuster with a contingency fee,” the 5-1 opinion says.

Labarga Labarga

Justice Jorge Labarga dissented. He said the word “disinterested” could also be taken to mean that appraisers must use independent judgment. Because the term is ambiguous, it must be interpreted to favor the insured, his dissenting opinion says.

Parrish’s home in Naples was damaged by Hurricane Irma in September 2017. He filed a claim and hired Keys Claims Consultants to assess the damage and cost of repairs. The contract called for KCC to be paid 10% of any amount recovered from State Farm.

In January 2018, KCC sent State Farm a proof of loss valuing the damage at $495,079 and demanding an appraisal, naming its CEO George Keys as Parrish’s appraiser. In February 2018, State Farm estimated the value of the loss to be $295,299 and sent Parrish a check for $107,157. Two months later, the insurer demanded an appraisal.

State Farm petitioned the trial court to compel Parrish to appoint a different appraiser. The trial court found that Keys was “disinterested” and should not be disqualified.

The insurer appealed and Florida’s 2nd District Court of Appeal reversed, ruling that a person who has a contingency fee agreement cannot be disinterested.

Parrish appealed. He argued to the Supreme Court that “over 25 years of uninterrupted case law” allowed “public adjusters to serve as the appraiser for the insured who hired them.” The term “disinterested,” Parrish argued, means only that the appraiser must be independent.

But the Supreme Court said that Keys’ “pecuniary interest” in the outcome of the appraisal disqualifies him.

State Farm State Farm

Attorney Steve Badger, a partner with the Zelle law firm in Dallas, said public adjusters acting as appraisers in the claims they are handling have been a big problem in Florida.

“How can a public adjuster, who is hired to be an advocate for the insured in the claim process, also serve as a disinterested appraiser?” he said in an email. “He can’t.”

Badger said the ruling is another step toward reducing abusive conduct in the Florida appraisal process.

“All appraisers should work on an hourly basis and should have had no prior involvement in the matter,”he said. “Plain and simple.”

A spokesman for State Farm said the insurer is pleased with the decision.

“The insurance contract requires each side to select someone who has no self-interest, including financial interest, in the appraisal,” Roszell Gadson said in an email.

The Florida Justice Reform Institute, often found on the side of insurers in litigation and legislative issues, had filed an amicus brief in the case. After the court decision was posted, the Institute’s president called it “another big win” for the group’s amicus program.

“Today, the Court correctly ruled that a public adjuster that is receiving a 10% contingency fee can’t serve as an appraiser, as they are not a disinterested party,” Institute President William Large wrote in an email.