“There is no explicit requirement that the appraisers and umpire inspect the property or read the policy, and many do not.” State Farm Lloyds v. Johnson, 290 S.W.3d, 886, 890 (2009), footnote 23, citing Br. of Tex. Windstorm Ins. Ass’n As Amicus Curiae Supporting Pet’rs at 8
In footnote 23, the Johnson court recognizes that appraisers and umpires can be lawyers ‘with no particular experience or expertise in claims or cause and origin of the damage being claimed.’ The requisite qualifications of an appraiser or umpire include individuals that might, or might not, possess ‘subject matter expertise.’ Even so, there is some confusion regarding whether ‘subject matter expertise’ is absolutely required. This confusion may arise from a misinformed interpretation of what constitutes ‘competent’ (a term found in the appraisal clause as one of the requisite traits of both appraisers and umpires).
A discussion of ‘competency‘ in Glenbrook Patiohome Owners Association v. Lexington Ins. Co., No. H-10–2929 (S.D. Tex. July 28, 2011)(mem. op.), is instructive.
“The role of the umpire under the policy is to receive the appraisers’ statements of the value of the property and the amount of loss. If they disagree, the decision agreed to by any two of the three will be binding. The plaintiff submitted a list of proposed umpires. In response, the defendant urges that given the umpire’s role in this case, the primary criterion for selection after impartiality should be substantive expertise in the areas of valuation and damage analysis. The appraisers selected by the parties have technical, substantive expertise in relevant areas. Although the umpire selected by this court must be competent to evaluate conflicting evidence and information on valuation of property damage, there is no contractual or case-law requirement for a specific license or professional certification in a technical field. An umpire must combine competence in evaluating conflicting disputed evidence with expertise and experience in assuring a fair process. Because appraisal proceedings have little structure imposed by the policy, the umpire’s role of assuring fairness of the process is at least as important as subject matter expertise.”
The Johnson court ruled that ‘appraisers must always consider causation, at least as an initial matter.’ Johnson at p. 893. If the umpire lacks subject matter expertise, what additional knowledge is gained from an onsite inspection that a photograph will not supply? Additionally, not all appraisals involve disputes concerning whether a specific occurrence caused damage. In those cases, the added expense of an onsite inspection likely outweighs any perceived evidentiary benefit beyond the use of photographs.
There is no onsite inspection requirement in most, if not all, insurance contracts. While it is within the Umpire’s sound discretion whether to perform an onsite inspection, parties and umpires should weigh the costs against the potential benefit of an onsite inspection.
‘In theory, appraisal is to be used to provide a simple, speedy, inexpensive, and fair method of determining the amount of loss.’ Fire Ass’n v. Ballard, 112 S.W.2d 532, 534 (Tex.Civ.App. — Waco 1938, no writ). Appraisers and Umpires must always weigh their actions against these basic tenets. It should be the rarest of circumstances when an umpire, lacking subject matter expertise, might impede a speedy award and cause parties to incur additional expense by performing an onsite inspection.
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