Summary of New Appraisal Process Regulations in Louisiana

Louisiana House Bill No. 609, enacted in the 2024 Regular Session, amends and reenacts sections of the Louisiana Revised Statutes of 1950. The Act aims to regulate the insurance claim appraisal process by establishing clear procedures, qualifications for appraisers and umpires, and mechanisms for enforcement. This summary focuses on the qualifications, conflicts of interest, and responsibilities of appraisers and umpires.

Key Provisions:

Fees:

The commissioner of insurance collects fees for appraisers and umpires: $55 for first-time applicants and $50 for annual renewals.

Fire Insurance Contracts:

Standard fire insurance policies include specific provisions, such as concealment and fraud clauses, exclusions for certain types of property and perils, conditions for cancellation, and mortgagee interests.

Registration of Appraisers and Umpires:

Individuals must register with the commissioner to act as appraisers or umpires for property insurance claims, with annual renewals required.
The commissioner is authorized to adopt necessary regulations to enforce these provisions.

Enforcement:

The commissioner can issue cease and desist orders, prohibit individuals from acting as appraisers or umpires, and rescind registrations for violations of the law or regulations.

Appraisal Process:

Appraisers must be independent and qualified, selected by both the insurer and the claimant. If appraisers cannot agree on the amount of loss, they must select an umpire. If they cannot agree on an umpire, a judge will appoint one.
An itemized decision agreed upon by either both appraisers or one appraiser and the umpire determines the loss amount.

Qualifications:

Appraiser Qualifications:

Must have at least three years of experience in their licensed profession.
Must have experience or training in estimating property damage.
Must hold an active license in one of the following professions:

Professional engineer (licensed under state law)
Architect (licensed under state law)
Insurance adjuster (licensed under state law)
Public adjuster (licensed under state law)
General contractor (licensed under state law)

Umpire Qualifications:

Must either be a qualified appraiser or an attorney licensed in the state with experience in first-party property damage litigation.
Must have no disqualifying conflicts of interest unless both parties agree in writing to waive them.

Conflicts of Interest:

Appraiser Conflicts of Interest:

Potential Conflicts:

Any direct or indirect interest that substantially conflicts with the appraiser’s duties.

Disqualifying Conflicts:

The appraiser or an immediate family member is a party to the claim.
The appraiser is a current employee or contractor of a party involved in the claim.
The appraiser is a current employee of the adjuster or public adjuster who adjusted the loss.
The appraiser is involved in a lawsuit against the insurer that is a party to the appraisal.

Umpire Conflicts of Interest:

Disqualifying Conflicts:

The umpire or an immediate family member is a party to the claim.
The umpire is a current employee or contractor of a party involved in the claim.
The umpire has an open claim with the insurer that is a party to the appraisal.
The umpire is involved in a lawsuit against the insurer that is a party to the appraisal.
The umpire has any other direct or indirect interest that substantially conflicts with their duties.

Responsibilities:

Appraiser Responsibilities:

Disclose any potential conflicts of interest within five days of being hired.
Must not withdraw from an appraisal unless compelled by unforeseen circumstances.
Postpone the appraisal for reasonable cause if requested.
Consider all information provided by the parties and any other reasonably available evidence.
Provide an itemized written appraisal to the parties.
Conduct the appraisal process fairly and efficiently.
Must not:

Allow outside pressure to affect the appraisal.
Delegate the duty to decide to another person.
Communicate with the umpire without including the other party or their appraiser.
Charge fees on a contingent basis or receive payments in barter, gifts, or favors.

Umpire Responsibilities:

Disclose any disqualifying conflicts of interest within five days of being hired and before beginning work.
Must not:

Begin work without written instructions from the appraisers.
Visit the claimant’s property without consent from both appraisers.

Must:

Address only disputed items.
Review differences and seek agreement with either or both appraisers.
Allow each appraiser to present evidence and arguments.
Review all information related to the dispute.
Provide an itemized written decision to the parties and appraisers.

May:

Ask questions and request documents or other evidence.
Consider conflicts of interest or objections to appraisers.
Accept either appraiser’s scope, quantity, value, or cost or develop an independent decision on disputed items.

Must decide all matters fairly, exercising independent judgment and integrity.
Must not:

Withdraw from the appraisal unless compelled by unforeseen circumstances.
Participate in settlement discussions unless requested by both parties.
Allow outside influence to affect the appraisal.
Delegate the decision to another person.

Must disclose all fees and not charge fees on a contingent basis or receive payments in barter, gifts, or favors.

Payment of Appraisal Awards:

Insurers must pay appraisal awards within thirty days of the award being submitted. If not paid, the award amount can be used as evidence but is not binding.

Costs:

Each party pays their appraiser’s fees, half of the umpire’s fees, and other reasonable costs.
Appraisers and umpires cannot charge fees on a contingent basis or receive gifts or favors.

Effective Date:

The provisions apply to property insurance policies issued, delivered, or renewed on or after January 1, 2025.

Thought For The Day About Appraisal

Appraisal is the most economical means of resolving an insurance property claim issue involving damages. Likewise, it is usually the most expeditious.
— The Appraisal Process: Resolution of Disputed Insurance Claims by John A. Voelpel III