American Property Casualty Insurance Association
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Jeffrey Brewer







April 28, 2014

PCI Opposes NY Public Adjusters’ Costly Changes to the Insurance Appraisal Process

ALBANY, N.Y. – Legislation being supported by the New York Public Adjusters Association would substantially change the well-established appraisal clause that is in almost every insurance policy contract and likely lead to more litigation and higher costs for consumers, according the Property Casualty Insurers Association of America (PCI).

The appraisal clause was designed to help settle insurance disputes regarding the amount of a loss, not whether the contract provides coverage for the loss. However, Assembly Bill 9346/Senate Bill 4756, as introduced, would greatly expand the scope of the appraisal clause beyond what it was intended to accomplish and inappropriately bring in coverage issues.

“There are important differences in determining the amount of a loss and what the coverage terms are of an insurance policy contract,” said Kristina Baldwin, vice president state government affairs for PCI. “As a result there are different processes for resolving disputes over each of these elements. While appraisers are great at determining the costs to rebuild, repair or replace property, we believe it is a mistake to have them act as a legal representative and interpret contract coverage issues. The insurance policy is a legal and binding contract. The process of determining coverage issues should not be removed from the legal system where these decisions have traditionally been made. By having appraisers interpret contract coverage issues, something they are not trained to do, policy wording would become subjective based on an individual’s interpretation rather than case law as they are under arbitration or through the courts. Rather than providing greater clarity and helping to resolve insurance disputes, the effect of these bills could be to remove any certainty regarding what the policy covers, lead to legal disputes and increased costs for consumers.”

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $195 billion in annual premium, 39 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 37 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.