I wish I had a dollar for every time I have heard this in the past two months. We have discussed the appraisal process in the past. State Farm is one of the few insurance companies that has (or had) an appraisal provision in its policy. I say had because we believe that State Farm has retracted those provisions from all new policies. Typically, when there is a dispute as to the amount of the loss, and this can be any loss not just a sinkhole, either side can demand the appraisal process to resolve the issues. Typically, ever since this existed State Farm was required to pay whatever the amount decided by the appraisers was, without regard for whether the work was started or not. State Farm tried to challenge this before. In fact I was the lawyer who challenged it for them. The case was Nichols v. State Farm and was later decided by the Fifth District Court of Appeals. In that case, State Farm wanted to argue that after the appraisal was complete they still did not have to pay the award for the subsurface repairs until the homeowner started the work. The appellate court opined that State Farm wrote the policy and if they wanted the policy to say that then they should have wrote it that way. The issue is that withholding the money for the repairs is not a mandatory statute, it is permissive. It is the insurance companies choice. The appraisal portion of the policy was mandatory as it stated that State Farm would pay the award amount without any limitations. Mandatory language trumps permissive language.

Now State Farm, about six years later, is apparently trying it from the other side. They now argue that they don”t even have to evaluate the amount of the subsurface repairs or comply with the appraisal provision until the homeowner complies with starting the repairs. If you wanted it that way, you should have wrote the policy that way. This is a real bad idea on State Farm”s part and I am quite surprised that a company that normally makes informed decisions is shooting from the hip like this. I do not think the law or the policy supports this argument and one State judge has already agreed. We expect many more if not all of the judges to agree and expect that State Farm will regret this move.

Font size Format I wish I had a dollar for every time I have heard this in the past two months. We have discussed the appraisal process in the past. State Farm is one of the few insurance companies that has (or had) an appraisal provision in its policy. I say had because we believe that State Farm has retracted those provisions from all new policies. Typically, when there is a dispute as to the amount of the loss, and this can be any loss not just a sinkhole, either side can demand the appraisal process to resolve the issues. Typically, ever since this existed State Farm was required to pay whatever the amount decided by the appraisers was, without regard for whether the work was started or not. State Farm tried to challenge this before. In fact I was the lawyer who challenged it for them. The case was Nichols v. State Farm and was later decided by the Fifth District Court of Appeals. In that case, State Farm wanted to argue that after the appraisal was complete they still did not have to pay the award for the subsurface repairs until the homeowner started the work. The appellate court opined that State Farm wrote the policy and if they wanted the policy to say that then they should have wrote it that way. The issue is that withholding the money for the repairs is not a mandatory statute, it is permissive. It is the insurance companies choice. The appraisal portion of the policy was mandatory as it stated that State Farm would pay the award amount without any limitations. Mandatory language trumps permissive language. Now State Farm, about six years later, is apparently trying it from the other side. They now argue that they don”t even have to evaluate the amount of the subsurface repairs or comply with the appraisal provision until the homeowner complies with starting the repairs. If you wanted it that way, you should have wrote the policy that way.

This is a real bad idea on State Farm’s part and I am quite surprised that a company that normally makes informed decisions is shooting from the hip like this. I do not think the law or the policy supports this argument and one State judge has already agreed. We expect many more if not all of the judges to agree and expect that State Farm will regret this move.