Florida Supreme Court Finds an Appraiser Cannot Be “Disinterested” if He or She Has a Financial Interest Related to Services as a Public Adjuster

The Supreme Court of Florida recently affirmed the Court of Appeals for the Second District of Florida’s holding that the president of a homeowner’s public adjusting firm, which is compensated on a contingency basis for its adjusting services, cannot serve as a “disinterested” appraiser under the language of an insurance policy.

In Parrish v. State Farm, the insured hired a public adjusting firm, Key Claims Consultants, Inc. (KCC), to provide public adjusting services (i.e. assess the damage and cost of repairs). The insured agreed to pay KCC a contingency fee equal to 10% of whatever amount the insured recovered from the insurance company. After initial inspections were completed and efforts to reconcile each parties’ estimates were unsuccessful, appraisal was demanded pursuant to the appraisal provision in the insurance policy.

KCC named its president as the insured’s appraiser, to which the insurance company objected, as he was not “disinterested.”

The Second District found that the president of the public adjusting firm had an interest for two reasons:

1. 1. KCC’s 10% stake in the insured’s insurance payout necessarily gave the firm’s president a pecuniary interest in the outcome of the appraisal.
   2. The firm’s president could not be disinterested because KCC represented the insured as his public adjuster.

The Second District certified conflict with the Court of Appeals of the Third District of Florida’s decision in the Brickell case to the Supreme Court of Florida.

The only issue addressed by the Court dealt with what “disinterested” means in the context of the insurance policy. The Court determined the word’s plain meaning applied, citing the definition of “disinterested” in Black’s Law Dictionary and Webster’s Third New International Dictionary, such that a “disinterested” person cannot consistently, with the generally understood meaning of that word, have a pecuniary interest in the matter at hand.

Therefore, if appraisal is demanded, any person with a pecuniary interest in the claim, as related to public adjusting services completed for the claim at issue, will be considered an interested person who cannot serve as a “disinterested” designated appraiser.

Please contact Amber Razzano or any member of Phelps’ Insurance team if you have questions or need advice or guidance.