Insurance policies provide for appraisal as a means to resolve disagreements as to the value of a loss, a procedure that legislatures long have included as part of the standard fire policy. An appraisal is an arbitration, and most of the same rules apply. The appraisal panel need not follow the law, but instead is permitted to reach what they believe is a fair result. But if fairness is to be a pillar of the process, the proceeding must not only be fair, but must objectively be perceived as fair. When a neutral arbitrator fails to comply with all disclosure requirements, this may result in the award being vacated.
Arbitrator’s Disclosure Requirements
An appraisal pursuant to an insurance policy is an arbitration that the California Arbitration Act, Code of Civil Procedure §1280, et seq., governs. While insurance code §2071 states that the appraisal proceedings are informal unless otherwise agreed, the proceedings must conform to the arbitration act’s procedural requirements. CCP §1281 et seq.
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