UPDATE: Third District Court of Appeals
The Third District Court of Appeals held in a recent opinion that public adjusters cannot be disinterested appraisers for their insured clients.
In the case, an insured hired a public adjuster to assist with her loss. The insured signed a retainer granting the adjuster 10% of the amount recovered, and the adjuster created an estimate that was submitted to State Farm.
When State Farm invoked appraisal, the insured named her public adjuster as her appraiser, which the trial court approved. State Farm appealed the trial court’s decision, arguing that the policy language required her to select a “disinterested” appraiser, and that her public adjuster was not disinterested. The Third District Court of Appeals agreed with State Farm.
The Court began its opinion by offering several definitions for the word “disinterested,” including “free from bias or prejudice,” “not having a pecuniary interest” and “free from selfish motives.” The Court explained that a public adjuster is the insured’s agent, and, under Florida law, an agent owes a fiduciary duty to his or her principal (i.e., the insured).
A public adjuster, furthermore, is subject to state regulations and ethical requirements, including that he or she must put the “honest treatment of the claimant above the adjuster’s own interests in every instance.”
A public adjuster is also paid a percentage of the amount paid to the insured and therefore has an interest in how much is recovered. Thus, Third District Court of Appeals concluded that, because a public adjuster is the insured’s agent owing a fiduciary duty to the insured's—and has a financial interest in how much is paid for the claim—the adjuster cannot be a “disinterested” appraiser.
To support its decision, the Court even cited to federal case law, in which the Southern District of Florida noted that a public adjuster has already taken his or her position on the scope of the damages by submitting the estimate that he or she created. It is unlikely that the public adjuster will suddenly adopt a different opinion because he or she is now appointed the appraiser—especially one that is significantly different from the work product he or she already produced.
Written by: Brittany Alexander, Esquire
The Law Offices of Scott Klotzman, P.A.
2001 Tyler Street, #5
Hollywood, Florida 33020