Ronald P. Weil of Weil Snyder & Ravindran in Miami.

Responding to the Third DCA's recent opinion in People's Trust Insurance v. Lavadie, the great victory according to People's Trust's attorney, Mr. Cantero, is that policyholders will be more likely to proceed with appraisal and mediation "saving the insured the time and expense of litigating these issues." All is well and good for an insurance carrier in the business of low-balling repair estimates to save on the bottom line while wishing to avoid the pressure points of attorney costs and fees they feel in litigation. But what about the homeowner?

From the plaintiff's perspective, the reality is that appraisal and mediation requirements are impediments to policyholders seeking swift closure to claims—especially ones where damage is ongoing, and time is of the essence. Take a recent example from our office where a client suffered water damage after his plumbing system sprung a leak. After reporting the loss, the carrier adjusted the claim for an amount below the deductible. Meanwhile, a third-party estimator hired by our firm valued the total cost of repair in the tens of thousands of dollars.

A scope and cost disagreement so great would normally make the case ripe for litigation. But a policy endorsement—like the one in Lavadie—required appraisal should either side demand it. After several months of negotiations where the carrier's representative made clear that settlement was possible, he suddenly declared he had no authority to override the carrier's original offer. He then admitted rather carelessly that he wanted to continue receiving work from this carrier, and that overriding its position on scope and cost would be "bad for business." The result: the "beneficial" appraisal process left our client even worse off—no closer to resolution, saddled with the financial and personal stresses of an unresolved claim that continues to cause damage to his home.

Our client's predicament is hardly unique, nor is it surprising. After all, why would we expect the appraisal process to function equitably when there is no mechanism to hold carriers accountable for bad faith dealings? With zero threat of attorney costs, monetary sanctions or other ramifications a court of law might impose, carriers in appraisal can conduct a one-two punch strategy of low-ball and delay, straining their customers' patience and bank accounts while preserving their own bottom lines. By agreeing with People's Trust, the court in Lavadie says this "have your cake and eat it too" industry practice is perfectly acceptable.

The inequities of forced appraisal are better realized when we consider a scenario in the aftermath of a natural disaster like a hurricane or flood, which has the potential to affect hundreds of thousands—if not millions—of policyholders simultaneously. With no consequence for bad faith dealings, carriers can intentionally undervalue claims with little to no threat of a lawsuit. The vast majority of customers, desperate to make repairs and unaware of their own rights will settle for these intentionally deflated amounts, while customers who go on to challenge the estimate will be forced into appraisal where they are at the mercy of the carrier and its decision whether to act in the homeowner's best interest.

Insurance companies and their attorneys will of course argue that plaintiff-side litigation strategies are replete with abuses and bad faith actions. And while we willingly concede there are plaintiff firms out there implementing such strategies, the carriers have the benefit of checking such behavior with the court if and when it arises.

Carriers and their attorneys might also argue a right to contract. After all, it was the customer who willingly chose to purchase the carrier's policy, with every opportunity to read it in full and reject it if displeased with the terms. This argument is flawed on two fronts. First, it incorrectly assumes homeowners are privy to all policy terms upon signature. Lavadie, for instance brings to light an all-too-common situation where the terms of the policy were changed—in this case two years after the homeowners purchased their policy with People's Trust—with only a single line in the renewal package to warn them. Second, with virtually every insurance provider in Florida now including an appraisal clause in their polices, it has become all but impossible to purchase an affordable policy in the State that does not include this inequitable language.

Ultimately, decisions like Lavadie are so detrimental because they encourage bad faith dealings by an industry already notorious for it. Experience shows that the appraisal process hurts homeowners by playing to the carrier's strengths—wealth, size and power—while exploiting the homeowner's weaknesses. As plaintiffs attorneys representing homeowners desperate for their carriers to simply uphold their end of the bargain by honoring the covered losses they experience, we can only hope—although the forecasts say otherwise—for a very uneventful hurricane season.

Ronald P. Weil is the founding partner of Weil Snyder & Ravindran. He has successfully represented plaintiffs in nationwide class actions, obtained groundbreaking verdicts and settlements advocating on behalf of sex abuse victims, victims of consumer fraud, victims of employment discrimination and for plaintiff's in complex business, construction and real estate litigation. He can be reached at [email protected].