Do Not Rush To Appraisal
I recommend prior to submitting a Proof of Loss that can trigger an appraisal, the parties (insurer and insured) or their representatives share written agreements as to what matters (issues) they agree on. That will take those matters off the table so-to-speak if appraisal is demanded, as they will no longer be considered matters in disagreement.
The law is clear that umpires cannot determine legal questions such as whether there is coverage or whether the insured has committed fraud.
The nature and the extent of damage, and the methodology of restoration or replacement, to return the property to its pre-loss state, commonly referred to as the scope of loss, are also legal issues that can be agreed upon or determined, pre or post appraisal, but the appraiser’s jurisdiction is limited to matters of valuation only.
The appraisal scheme is to prevent adjudication by ambush; the appraiser’s role is to present evidence it is not to give evidence.
The appraisal process is subject to the principles of procedural fairness.
The courts will interfere in the appraisal process if the umpire exceeds their jurisdiction, for example, by purporting (intending) to act as an arbitrator.
A judge may terminate the appraisal as a matter of judicial review and against a standard of reasonableness and the flexible standards of procedural fairness.
Case law shows that there can be more than one appraiser and that lawyers and even articling students can be appraisers.
Once appraisal has been demanded the appraiser for the insurer should outline specific matters in disagreement. The appraisers then meet or otherwise communicate to identify whether matters outlined are legal matters or valuation matters.
If the matters are legal in nature arbitration or litigation is the appropriate forum for resolution. However, the umpire may determine different valuations; one valuation assuming the appraiser for the insured’s scope of loss/position is correct and, a separate valuation assuming the appraiser for the insurer’s scope of loss/position is right.
That way the factual determination can be left where it belongs, with the trier of fact.
The umpire should design a procedure appropriate for the exigencies of the case and a procedure that could be adapted and changed as the appraisal process progresses.