Neutral Evaluation Process

As the result of a law recently enacted in Florida, insurance companies now have a new weapon with which to deny or otherwise underpay claims for sinkhole related damage. When an insurance company senses a dispute between it and a homeowner regarding a property owner's claim for sinkhole related damage, the insurance company can now make use of a process cleverly called "Neutral Evaluation" - which evidence reflects is anything but impartial.

Under F.S.A. Section 627.7074, either the policyholder or the insurance company has the right to request a neutral evaluation from the Florida Department of Financial Services (DFS). Once either party has submitted its request, the process becomes mandatory on the other party - i.e. the other party cannot refuse to participate.

In essence, during the neutral evaluation process, an evaluator examines the subject property and any reports given to him by the parties. After reviewing all information he deems pertinent, the evaluator renders a written opinion as to what he believes is the cause of the loss and the appropriate method to repair same.

The neutral evaluator is a professional geologist or engineer who has received training in alternative dispute resolution. The DFS maintains a list of neutral evaluators available to conduct the evaluations. The policyholder and insurance company have 10 days to agree on the selection of the evaluator; if they cannot agree, then the DFS will make the decision for them.

Once a neutral evaluator has been selected, the evaluator will choose a time, date and location to hold an informal conference between the insurance company and policyholder. The conference must be held within 45 days after the initial request for neutral evaluation is made. During the conference, both parties have the opportunity to explain their side of the dispute and present evidence supporting their claims. The policyholder may have an attorney represent him or her during this process.

If the insurance company and policyholder cannot reach an agreement before the evaluation process ends, the neutral evaluator will write a report with their findings. In the report the neutral evaluator must state whether, in the evaluator's professional opinion, the policyholder suffered damage consistent with sinkhole activity. If the neutral evaluator agrees that the policyholder's property sustained sinkhole damage, then the evaluator will recommend suggested repairs and their costs in the report.

The evaluator's recommendations are not binding on either party, meaning they can choose to accept them or decide to pursue legal action to settle the claim.

Implications of the Neutral Evaluator's Report

Although the process set forth above seems straightforward, it is fraught with nuances which could skew the results in favor of the insurance company. Most glaringly, the evaluators may not be as "neutral" as their title would seem to suggest. The evaluators are always paid by the insurance company and the only qualification to make them "neutral," is that they receive less than 90 percent of their revenue from insurance companies! Therefore, a geologist who receives 89 percent of his income from insurance companies would be deemed "neutral" to the parties for these proceedings.

Oftentimes, the recommendations made by the neutral evaluator are not in the policyholder's best interests. If the neutral evaluator agrees that sinkhole activity is to blame for the policyholder's property damage, the evaluator is likely to recommend the cheapest methods possible for repairing the damage. For example, the report may include a recommendation for grouting (filling the ground with concrete) rather than underpinning, which is more effective repair method, but also more expensive.

The law also punishes policyholders who decide to forgo the neutral evaluator's recommendations and use the court system to seek a more favorable result. Even though the neutral evaluator's report is non-binding, the report is admissible as evidence in any legal proceeding. The admissibility of evidence has always been governed by the Florida Rules of Civil Procedure. These Rules set forth specific requirements which must be met in order for any evidence to be admissible at trial. The "automatic admissibility" of the evaluator's report is in direct violation of the Florida Rules of Civil Procedure and was created for the sole purpose of allowing the insurance company to sneak another biased opinion before the jury.

Additionally, the judge only will award attorney fees if the policyholder wins a more favorable outcome at court than provided for in the neutral evaluator's report.

Protect Your Interests in a Sinkhole Dispute

Property owners still have options to protect themselves in sinkhole claims disputes with their insurance companies. Notably, it can be helpful to work with experienced legal counsel in the claims dispute process. By working with an attorney from the beginning, the homeowner can effectively protect their legal rights and options throughout the process.

If you are contemplating making a claim for sinkhole related damage, it may be worth your while to contact an experienced attorney to guide you through the process. If you have already placed your claim and dispute the insurance company's decision to either deny or underpay your claim, the retention of a qualified sinkhole claims lawyer may be your best chance to receive appropriate compensation for your loss.