Appraisal in Florida Property Damage Cases: A Valuable Tool or Lengthy Detour?

Now that the 2025 hurricane season is upon us, property insurance is on everyone’s mind. More than ever, it is important to understand what may or may not be covered or available in a real estate property insurance policy. In Florida real estate disputes involving property damage—especially those arising from hurricane claims, water intrusion, roof failure, or fire loss—appraisal is a common and often misunderstood mechanism for resolving disagreements over the value of the damage. While appraisal can offer a faster path to resolution than litigation, it also comes with potential risks that both property owners and insurers must carefully weigh.

What Is Appraisal?

Appraisal is an alternative dispute resolution (ADR) process commonly found in insurance policies. It is sometimes used after or in place of other alternative dispute resolution processes, such as mediation or arbitration. When triggered or requested, each party (typically the property owner and the insurance company) selects an appraiser, and those two appraisers usually, but not always, select a neutral umpire. The panel then determines the amount or value of the loss claimed. Appraisal is not used to determine coverage issues or disputes over policy language. Florida courts have consistently held that the purpose of appraisal is to resolve a factual dispute regarding the value of a covered loss—not to interpret the policy or determine liability. (See State Farm Fla. Ins. Co. v. Parrish, 312 So. 3d 145 (Fla. 2d DCA 2021)).

Legal Framework in Florida

Appraisal in Florida is governed largely by contractual language in the insurance policy and case law, rather than by a specific statute. Therefore, the option for appraisal will vary on a case by case basis as not every policy provides this option. However, courts uphold the enforceability of appraisal clauses as long as they are clear and not waived.

Key decisions related to appraisals include:

  • Johnson v. Nationwide Mutual Insurance Co., 828 So. 2d 1021 (Fla. 2002)(The Florida Supreme Court held that appraisal does not determine coverage, only the amount of loss).
  • Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n, 54 So. 3d 578 (Fla. 3d DCA 2011)(Clarified that when coverage is admitted but amount is disputed, appraisal is appropriate even if factual disputes exist).
  • State Farm Fla. Ins. Co. v. Crispin, 290 So. 3d 150 (Fla. 5th DCA 2020)(Reaffirmed that courts—not appraisers—should decide whether an appraisal clause has been triggered).
  • State Farm Fla. Ins. Co. v. Roof Pros Storm Division Inc. (2022) Case No. 5D20-2415, Case No. 5D20-2418, Case No. 5D20-2419, Case No. 5D20-2420; (Lack of subject matter jurisdiction prevented Court from appointing neutral umpire).
  • American Coastal Ins. Co. v. San Marco Villas Condo. Ass’n Inc., No. SC2021- 0883, 2024 WL 369079 (Fla. Feb. 1, 2024) (Florida Supreme Court allows Court to order the parties to appraisal even when the insurer has denied the claim).

When Is Appraisal Used?

Appraisal is frequently used in residential and commercial real estate claims when:

  • The insurer admits there is a covered loss, but the parties disagree on the amount of the loss.
  • The insured wants to avoid protracted litigation and wants to try to obtain a higher payment.
  • Both parties seek to preserve the relationship by avoiding adversarial proceedings.

Pros and Cons of Using Appraisal

Appraisal can be a time and money saving tool when there is a property damage dispute. Here are some positive aspects:

  • Speed: Appraisal is typically faster than litigation, with many decisions issued within months.
  • Cost-Effective: Legal fees may be lower than a full-blown lawsuit, though costs can still rise depending on experts and the appraisers and/or umpire selected.
  • Less Formal: Less procedurally complex than court, and less emotionally taxing for homeowners.

There are risks to appraisal also. Here are some important aspects to consider:

  • No Resolution on Coverage: Appraisers cannot determine whether the damage is covered by the insurance policy—only how much it costs to fix. This can result in a hollow “win” if the insurer still denies payment on coverage grounds.
  • Cost Uncertainty: If appraisers, umpires and then experts are needed, costs can escalate quickly.
  • Potential for Waiver: Delay in invoking appraisal or engaging in litigation may waive the right to use it.

Watch the Policy Language

Most Florida homeowner and commercial insurance policies contain appraisal clauses, but not all appraisal clauses are created equal. Carefully reviewing the timing, conditions, and selection process for the appraiser and/or umpire is essential. Also, note that demanding appraisal too late in the dispute could be interpreted as a waiver of the right to use it. Appraisal can be a powerful tool for Florida property owners and insurers—but only when used strategically. It is effective when coverage is not in dispute and both sides are committed to a fair valuation. However, when issues of causation, coverage exclusions, or policy interpretation exist, mediation or arbitration may be the better route if the parties are trying to avoid prolonged litigation.