William Collum and Michael Rainey | Butler Weihmuller Katz Craig
In most circumstances involving an insurer’s extension of coverage for a property loss, an appraisal provision in an insurance policy provides an insured and an insurer a mechanism by which to resolve disagreements regarding the amount owed for that loss. If invoked, each party appoints an appraiser, the individual to act as a representative of that party for the appraisal.
While most, if not all, policies require a “competent” appraiser, some policies also require appointment of a “disinterested” appraiser. If an insured appoints a public adjuster with whom the insured has a contingency fee agreement, can that contingent-fee public adjuster serve as a “disinterested” appraiser where that person’s fee is contingent on the outcome of the appraisal?
Until recently, the Florida Supreme Court was poised to hear and resolve this unsettled question upon which the Florida’s appellate courts have disagreed. However, with the Florida Supreme Court’s unanimous October 18, 2021 order discharging jurisdiction for review of State Farm Florida Insurance Company v. Sanders, 45 Fla. L. Weekly D870 (Fla. 3d DCA Apr. 15, 2020), the Court chose not to resolve this conflict.
Consequently, this “disinterested” appraiser issue remains unresolved for singular application statewide. This overview outlines the current postures of Florida’s appellate districts and their respective judicial circuits on this issue, addressing the Florida jurisdictions where a court: 1) will permit a contingent-fee public adjuster to serve as a “disinterested” appraiser, 2) should prohibit it under existing case law, and 3) might go either way on the issue.
Courts that prohibit financially-interested individuals from serving as “disinterested” appraisers
Three of Florida’s five appellate districts have expressed prohibitions in some form or another against parties with financial interests and/or fiduciary duties from serving as a “disinterested appraiser.” Those districts, their respective judicial circuits and counties, district-specific nuances, and relevant case law are as follows:
| DCA | Circuits/Counties | Rule & Case Law |
| 2nd DCA | 6th Judicial Circuit❯ Pinellas❯ Pasco10th Judicial Circuit❯ Hardee❯ Highlands❯ Polk12th Judicial Circuit❯ Desoto❯ Manatee❯ Sarasota13th Judicial Circuit❯ Hillsborough20th Judicial Circuit❯ Charlotte❯ Collier❯ Glades❯ Hendry❯ Lee | A public adjuster who has a contingency interest in an insured’s appraisal award or represents an insured in an appraisal process is not a “disinterested appraiser” under an insurance policy’s appraisal provision requiring parties to select “disinterested” appraisers. State Farm Fla. Ins. Co. v. Parrish, 312 So. 3d 145 (Fla. 2d DCA 2021) |
| 4th DCA | 15th Judicial Circuit❯ Palm Beach17th Judicial Circuit❯ Broward19th Judicial Circuit❯ Indian River❯ Martin❯ Okeechobee❯ St. Lucie | A pubic adjuster who holds a contingency interest of an insured’s ultimate recovery, inspects the property and submits the claim to the insurance company, and who then names himself as the insured’s appraiser for the purposes of appraisal, cannot be “disinterested” and therefore cannot serve as the “disinterested appraiser” for the insured. State Farm Fla. Ins. Co. v. Valenti, 285 So. 3d 958 (Fla. 4th DCA 2019).Of note, the Valenti court stopped short of concluding that, as a matter of law, a contingency agreement in an insured’s recovery precludes a public adjuster from serving as a “disinterested appraiser.” Instead, the current precedent within the district establishes a more narrow approach in which the facts of the case, in addition to the existence of a contingency agreement, establish whether a public adjuster can serve as a “disinterested appraiser”. |
| 5th DCA | 5th Judicial Circuit❯ Citrus❯ Hernando❯ Lake❯ Marion❯ Sumter7th Judicial Circuit❯ Flagler❯ Putnam❯ St. Johns❯ Volusia9th Judicial Circuit❯ Orange❯ Osceola18th Judicial Circuit❯ Brevard❯ Seminole | Attorneys may not serve as their clients’ “disinterested appraisers” for the purposes of appraisal. Fla. Ins. Guaranty Ass’n v. Hanse, 150 So. 3d 1272, 1273 (Fla. 5th DCA 2014); Fla. Ins. Guaranty Association v. Branco, 148 So. 3d 488 (Fla. 5th DCA 2014).If an appraiser is entitled to a percentage of the recovery from an insured’s claim, the appraiser cannot serve as the insured’s “disinterested appraiser”. State Farm Florida Insurance Company v. Crispin, 290 So.3d 150, 152 (Fla. 5th DCA 2020) |
Courts that permit financially-interested individuals to serve as “disinterested” appraisers
At present, only one of Florida’s five appellate districts permits individuals with financial interests to serve as a “disinterested appraiser”:
| DCA | Circuits/Counties | Rule & Case Law |
| 3rd DCA | 11th Judicial Circuit❯ Miami-Dade16th Judicial Circuit❯ Monroe | Direct or indirect financial or personal interest in the outcome of an appraisal does not disqualify an individual from serving as a “disinterested appraiser.” If the appraiser’s interest is disclosed, it is acceptable for the appraiser to participate in the appraisal process. Brickell Harbour Condo. Ass’n, Inc. v. Hamilton Specialty Ins. Com., 256 So. 3d 245, 249 (Fla. 3d DCA 2018) (applying the court’s prior rulings in Rios v. Tri-State Ins. Co., 714 So.2d 547 (Fla. 3d DCA 1998) and Galvis v. Allstate Ins. Co., 721 So. 2d 421 (Fla. 3d DCA 1998)); State Farm Fla. Ins. Co. v. Sanders, 45 Fla. L. Weekly D870, 2020 WL 1870776 (Fla. 3d DCA Apr. 15, 2020), review granted, SC20-596, 2020 WL 5946343 (Fla. Oct. 7, 2020), and case dismissed, SC20-596, 2021 WL 4824155 (Fla. Oct. 18, 2021).The rule presently in effect in this district originates from the Third District’s opinion in Rios, which addressed whether policy language requiring an “independent” appraiser precluded an individual with a contingency interest in an appraisal outcome from serving as a party’s appraiser. The Third District, in looking to the dictionary definition of “independent”, held that the policy language only required that an appraiser be unaffiliated with the appointing party.With regard to the question of whether the type of compensation an appraiser receives (e.g., contingency interest) precludes a party from serving as an appraiser, the court determined that it did not, its rationale being the Code of Ethics for Arbitrators in Commercial Disputes, promulgated jointly by the American Arbitration Association and American Bar Association, in effect at the time. This “Code of Ethics” at the time required that any direct or indirect financial or personal interest in the outcome of the [appraisal] be disclosed. The court further reasoned that any partiality on the part of any party appraisers could be offset by “a competent, impartial umpire” appointed by the party-designated appraisers.The Code Ethics has been revised since the Third District’s Rios and Galvis decisions. The revised version, effective March 1, 2004, adopted by the American Arbitration Association and the American Bar Association, establishes a presumption of neutrality and impartiality for all [appraisers], including party-appointed [appraisers]. This revision was highlighted by the Fifth District, using it as a basis for its opinion in Branco, which in turn helped shaped the Second and Fourth District’s holdings.The Third District recognized its decisions in Rios and Gavis have been undermined by the revision of the Code of Ethics combined with decisions by Florida’s other appellate districts. However, the Third District in Sanders reasoned that, until the issue of disinterested appraisers comes before the Third DCA on appeal of a final judgment, rather than through a petition for writ of certiorari (which is reviewed differently by an appellate court), the decisions of Rios and Gavis will remain the controlling law within the Third District and its judicial circuits. This commentary in Sanders, however, provides an argument that, on an appeal of a final judgment, the Third District may end up receding from its prior decisions and joining the weight of authority holding that a financially-interested individual cannot serve as a “disinterested” appraiser. |
Courts that have not directly resolved whether financially-interested individuals may serve as “disinterested” appraisers
Currently, only the First District has not resolved by written opinion whether an individual with a financial interest in an insured’s recovery may serve as a “disinterested appraiser” for the appraisal. The First District, stretched across the Florida panhandle, contains the following judicial circuits and counties: 
Given the prohibitions in effect in the Second, Fourth, and Fifth Districts and the recent recognition by the Third District that its prior decisions and reasoning has been undermined, courts within the First District may agree that a financially-interested individual cannot serve as an insured’s “disinterested” appraiser.