Insurance & Risk · Quorum Case Files Season 9 Companion · The Appraisal Clause

The Appraisal Clause, Both Ways: The Lowball a Board Fought and the Award a Board Poisoned

Most commercial property policies an association buys contain a paragraph, near the back, that lets either side take a disputed loss amount out of the carrier’s hands without a judge. In Naples, a board used it to turn a $32,568.23 hurricane check into a $6.15 million judgment. In Colorado, a board used the same clause, won more than $10 million, and lost all of it because of whom it picked. The clause did not change. One word in it did all the work.

Educational notice. This information is educational in nature and should not be construed as legal or insurance advice. The two principal matters described here are closed appellate decisions, and the facts recounted are those the courts stated; the Orlando matter described in passing is ongoing and reported, not adjudicated. Consult qualified association counsel and a licensed insurance professional regarding your association’s coverage and jurisdiction.

Two Checks, Seven Years Apart

In 2017, Hurricane Irma crossed Florida. At Mont Claire at Pelican Marsh, a condominium association in Naples, the roofs and the building envelope took the storm. The association filed a claim with its carrier, Empire Indemnity Insurance Company. Empire adjusted the roofs and the envelope and issued a check for $32,568.23.

The association did not accept that figure as the end of the matter. It read the conditions section of its policy and demanded appraisal. Empire refused. The association sued in the United States District Court for the Middle District of Florida; the docket number, 2:19-cv-00601, places the suit on file by 2019. The appraisal eventually went forward, and the panel returned two figures: an actual cash value of $6.6 million and a replacement cost value of $8.17 million.

On October 31, 2024, a panel of the United States Court of Appeals for the Eleventh Circuit affirmed a judgment against Empire of $6,148,949.12, plus $1,033,942.75 in prejudgment interest. Empire had argued the result was a windfall to the association. The court answered that “it is the policy language and the way Empire handled the claim,” in the court’s words, “that led to that result.”

Seven years separate the two numbers. The opinion is about the carrier’s money and does not describe the buildings, the unit count, or what the owners paid in the meantime. This article does not fill those gaps in.

The second case runs the other way. In Colorado, Summit Park Townhome Association had a hail claim with Auto-Owners Insurance Company. The matter was in federal court when the appraisal went forward, and the district court had issued an order requiring disclosure of anything bearing on an appraiser’s impartiality. The association’s appraiser and the umpire signed an award, in the Tenth Circuit’s words, “exceeding $10 million, which was 47% higher than Summit Park’s own public adjuster had determined.” Auto-Owners paid it. Then it went to work on the appraiser.

On March 30, 2018, the Tenth Circuit affirmed the district court: the appraiser was disqualified, the award was vacated, the association’s counterclaims were dismissed with prejudice, repayment was ordered, and $97,797.53 in interest ran to the carrier. Auto-Owners Insurance Co. v. Summit Park Townhome Association, 886 F.3d 852 (10th Cir. 2018), is a published opinion.

The Mechanism: What an Appraisal Clause Does

What follows is a general description of a standard policy condition, not the text of either association’s policy. The only clause language quoted in this article is the sentence the Tenth Circuit quoted from the Summit Park policy. An association’s own clause may differ in wording, timing, and procedure, and the licensed insurance professional and counsel read the actual paragraph before anyone relies on it.

The appraisal condition addresses one disagreement: the amount of a covered loss. It does not decide whether a loss is covered, whether an exclusion applies, or whether a deadline was met. Those are coverage questions and they go elsewhere. Appraisal is for the situation in which the carrier agrees the roof is covered and says the damage is worth one figure, and the insured says the damage is worth a very different figure.

In the standard form, either party may demand appraisal. Each party selects an appraiser. The two appraisers select an umpire. An agreement by any two of the three sets the amount of the loss. The clause the Tenth Circuit quoted in Summit Park describes the selection this way: “each party will select a competent and impartial appraiser.”

Two features of that structure carry both cases in this article.

Two signatures of three. The award is the product of agreement between any two panel members. If one of those two is later disqualified, the award carries one valid signature. In Summit Park, the court held that “with [the appraiser] disqualified, the appraisal award had only one valid signature (the umpire’s). The award was therefore invalid under the terms of the insurance policy.” One signature is a piece of paper.

Impartial. The clause does not say “the appraiser of your choosing.” It says competent and impartial. That word is the condition on the board’s own power. The board that selects an appraiser is representing to the other side, and in a litigated matter to a court, that the person it chose meets that description. The Summit Park court tested the description against two things: what the appraiser had said before the case about which side he favored, and his working relationships.

Two further general terms appear in the Mont Claire record and are worth defining because boards meet them on every property claim. A property policy pays on one of two bases. Actual cash value is, in general terms, the depreciated worth of what was damaged. Replacement cost value is what it costs to put the property back. Which basis applies, and when, depends on the policy and on steps the insured has or has not taken. The Mont Claire panel priced both; how the record moves from the panel’s $6.6 million actual cash value figure to a judgment of $6,148,949.12 is not reconstructed here.

One procedural point from the companion published decision matters to boards inside the Eleventh Circuit, which includes Florida. Carriers facing an order to appraise sometimes appealed that order, which bought time while the owners waited. In Positano Place at Naples I–IV Condominium Associations v. Empire Indemnity Insurance Co., decided October 20, 2023, Judge Lagoa wrote for the court that an order compelling appraisal and staying the case is not appealable under 28 U.S.C. § 1292(a)(1), the statute that allows certain orders to be appealed before a case ends, or under the Federal Arbitration Act. In that matter, Empire had found coverage on three of five buildings and the four associations sought appraisal. The record available for this article stops at the order; the merits outcome is not stated here because it is not confirmed.

The Declarations Page

The season’s signature segment reads what the board thought it had bought, what the policy actually provided, and what the distance cost. In this episode the segment reads a condition rather than a limit, because in both cases the limits held. Both policies covered the loss. What the boards controlled was the room after the storm.

Interest in the Florida case ran against the carrier for the years it refused the room. Interest in the Colorado case ran the other way. The clause was the same in both.

An aside on who pays in the middle

The Mont Claire opinion is about the carrier’s money, not the owners’. A reported matter in Orlando shows the shape of what the record there omits, and it is ongoing, so it is described in present tense as of this writing in October 2026, with the last source dated April 29, 2025.

Dockside at Ventura is a condominium in Orlando. Hurricane Ian, in September 2022, flooded all 133 first-floor units across its nineteen buildings, as FOX 35 Orlando reported in September 2023. The manager, as reported, estimated $160,000 per unit to repair and said the association had received $7 million from insurance; the manager also described the storm, as reported, as the community’s “second major loss from a hurricane in the last four years.” On September 20, 2023, a three-member board voted unanimously, as reported, to approve a twelve-year special assessment: 144 monthly payments at a minimum of $650 per month per unit, stated as being “to cover an insurance gap that is currently in litigation.” Owners circulated a recall petition; where it went is not reported in the sources available here. At the reported minimum, the assessment is $93,600 per unit over its term.

In January 2025 the association sued its carrier, Voyager Indemnity Insurance Company, in the Middle District of Florida. Law360 docket headlines from January 3 and January 17, 2025, describe a claim of roughly $9.5 million that the association says was neither paid nor appraised; the complaint itself was not read for this article. WKMG reported on April 29, 2025, that 49 owners were still out of their homes. No outcome is available, and none is predicted here.

This article draws no conclusion about Dockside’s board or carrier. The general point is that a carrier dispute is measured in years and an owner’s budget in months. Whatever sits between those two clocks is funded by the owners, and the decision about how to fund it is a governance act that is noticed, voted, and recorded under the governing documents and the state’s special assessment rules. See special assessment authority and procedure and, for Florida associations, Florida special assessments.

The Record

Mont Claire: the clause used well

The sequence in the Eleventh Circuit’s unpublished opinion of October 31, 2024, docket number 23-14162, is as follows. After Irma in 2017, Empire paid $32,568.23 on the roof-and-envelope claim. The association demanded appraisal. Empire refused. The association sued in the Middle District of Florida. The appraisal panel ultimately set the loss at $6.6 million actual cash value and $8.17 million replacement cost value. The district court entered judgment, and on appeal Empire argued the association was receiving a windfall. The Eleventh Circuit affirmed a judgment of $6,148,949.12 plus $1,033,942.75 in prejudgment interest, writing that “it is the policy language and the way Empire handled the claim” that “led to that result.”

Because the opinion is unpublished, it binds these parties and no one else. It is the end of this claim. The published companion, Positano Place (October 20, 2023), is the decision with precedential effect: an order compelling appraisal and staying the case cannot be appealed under § 1292(a)(1) or the Federal Arbitration Act. For boards in the federal courts of the Eleventh Circuit, the carrier’s appeal of an appraisal order is no longer a route to delay.

Who sat on Mont Claire’s board, who advised it, and how the panel came to sit after Empire’s refusal are not in the opinion and are not stated here.

Summit Park: the clause broken from the inside

The caption is Auto-Owners Insurance Co. v. Summit Park Townhome Association; the carrier is the plaintiff. The matter was in the United States District Court for the District of Colorado when the appraisal proceeded, and that court had entered an order requiring disclosure of matters bearing on an appraiser’s impartiality. The association’s appraiser and the umpire agreed on an award “exceeding $10 million, which was 47% higher than Summit Park’s own public adjuster had determined.” Auto-Owners paid the award.

Auto-Owners then challenged the appraiser. The courts found, in the Tenth Circuit’s words, his “past expressions of favoritism toward policyholders and his extensive relationship with the Merlin law firm.” The courts also found that the association had concealed an earlier fee contract with the appraiser containing what the record describes as a contingent cap; the association had disclosed only the final contract, and a representative of the board gave a sworn statement that the final contract was the only one. The court’s finding on that statement is three words: it “was not true.” This article goes no further than those words. The opinion does not say the representative knew the statement was false, and the representative is not named here.

The appraiser was disqualified. “With [the appraiser] disqualified, the appraisal award had only one valid signature (the umpire’s). The award was therefore invalid under the terms of the insurance policy.” The award was vacated, the association’s counterclaims were dismissed with prejudice, repayment was ordered, and $97,797.53 in interest was awarded to Auto-Owners. The Tenth Circuit affirmed the district court (100 F. Supp. 3d 1099) on March 30, 2018, in a published opinion that binds the federal courts of the Tenth Circuit, Colorado among them.

The storm date, the unit count, the amount repaid, and what the contingent cap was contingent on are not in the materials relied on here and are not supplied.

One distinction in the Summit Park record is easy to blur. The court did not vacate the award because it ran 47 percent above the association’s own adjuster. It vacated the award because the appraiser was not impartial and an earlier contract was concealed. Whether the number was right was never reached.

What a Board Does With This

Neither case is about the limit on the declarations page. Both are about the process a board runs after a loss, and process is what a board controls. CICSC Standard FIN-006, Master Policy Insurance Adequacy Review, frames insurance as a recurring governance obligation performed on a calendar with a documented record, and expressly leaves coverage selection, carrier characterization, and claims positions to the association’s licensed professional and counsel. The same posture applies to the appraisal clause. The board does not decide what the clause means or whether to invoke it on its own judgment. It asks, records, and acts on the answers.

Know the paragraph exists before the storm. FIN-006 § 3.1 has the board put written questions to its insurance professional at each renewal. For this mechanism, boards typically add: does this policy contain an appraisal condition; what does it say about who may demand it and when; what does it require of the appraiser each party selects; and how does the policy treat actual cash value versus replacement cost, and what steps affect which applies. The answers go in the insurance file (§ 4.3) so that the board reading them after a loss is not reading them for the first time.

Treat the decision to demand appraisal as a board act. Demanding appraisal, and later filing suit when a carrier refuses, are decisions the board makes on the advice of counsel, and they are minuted as decisions. The record of that decision is what shows, years later, that the board acted deliberately and on advice. See board resolutions in practice and how directors lose the shield: the protection that operates before a claim is a decision process, and the minutes are its evidence.

Select the appraiser as if the other side will depose the appraiser for a day. The Summit Park court looked at prior statements of favoritism and at working relationships. A board that asks its counsel and its insurance professional what a disinterested appraiser looks like in its jurisdiction, and selects on that basis, is honoring the condition the clause places on its own power. The governance lesson of the episode is one sentence: a board names an appraiser the carrier’s lawyer could depose for a day and find nothing, and every engagement letter with that appraiser goes into the disclosure file the day it is signed.

Disclose every contract, including the superseded ones. The concealed earlier contract, not the award’s size, is what the Tenth Circuit relied on. A board that keeps every engagement letter in one file and produces all of them when disclosure is required has nothing in a drawer. FIN-006 § 4.1 and § 4.3 describe the record and the file; the same discipline applied to appraiser engagements is what the Colorado record was missing. On custody of documents and the value of a complete file across board turnover, see institutional knowledge as a financial asset.

Treat sworn statements as governance events. When a board representative is asked to sign a declaration or an affidavit in a coverage dispute, the statement is made on the association’s behalf and under penalty. Boards typically have counsel confirm the factual basis of any sworn statement against the association’s own records before it is signed. The Summit Park finding that a statement “was not true” is the finding that cost the association the award.

Plan for the clock, and record how the gap is funded. Mont Claire took seven years from storm to affirmance. A board controls neither the carrier’s posture nor the court’s calendar. It controls whether a multi-year dispute is a known input to its reserve and budget planning (FIN-006 § 6.3), whether any interim funding decision is noticed, voted, and minuted under the governing documents and statute, and whether owners financing the wait receive a plain-language statement of what the policy covers, what the dispute is about, and what the assessment funds (FIN-006 § 5.1 and § 5.3).

Record declined routes as declined. If counsel and the insurance professional review a disputed valuation and the board decides not to demand appraisal, or decides to accept a figure rather than litigate, FIN-006 § 4.2 has the minutes record that the option was identified, what it was expected to cost, and how the board voted. A route not taken because it was never considered and a route declined by vote look identical on the ledger and entirely different in the record.

When to Consult Counsel and the Insurance Professional

Boards typically bring the following to counsel and to their licensed insurance professional rather than resolving them at the table:

• Whether the association’s policy contains an appraisal condition, what it requires, and whether a particular dispute is about the amount of loss (appraisal) or about coverage (not appraisal);
• Whether and when to demand appraisal on a disputed valuation, and what the policy and state law provide if the carrier refuses;
• What “competent and impartial” requires of a proposed appraiser in the association’s jurisdiction, and what disclosure is owed about the appraiser’s engagement, fee structure, and relationships;
• Which valuation basis applies to a given loss and what steps affect the association’s entitlement to replacement cost rather than actual cash value;
• The factual basis of any sworn statement a board representative is asked to sign in a coverage matter, confirmed against the association’s records before signature;
• The notice, vote, and documentation the governing documents and statute require for any special assessment or borrowing adopted to fund repairs while a dispute runs.

The Season 9 Companion Series

1. The Liability Limit Is Sized to the Loss the Board Can Imagine — the liability limit vs. the loss
2. Eighty Percent of What? The Flood Coinsurance Clause and the Warning in the Board’s Own File — the warning the board shelved
3. Who Gets the Mail: Coverage That Lapses During a Management Change — the notice nobody forwarded
4. Per Occurrence or Aggregate: Reading the Declarations Page Instead of Asking the Broker — the limit the board misread
5. A Paid Claim Is Not a Funded Rebuild: Custody of Insurance Proceeds and the Sell-or-Assess Vote — the proceeds and the vote
6. The Appraisal Clause, Both Ways: The Lowball a Board Fought and the Award a Board Poisoned — the appraisal clause, both ways (this article)
7. Same Street, Two Policies: The Renewal Decision Is the Only One That Survives the Fire — two boards, one street, two renewals
8. The Twenty Percent Building: A Policy Sized to Partial Damage in a Building That Burned Whole — the building the market would not insure

Tags: appraisal clause · impartial appraiser · umpire · actual cash value · replacement cost value · Mont Claire at Pelican Marsh · Positano Place · Summit Park Townhome Association · Hurricane Irma · hail claim · 28 U.S.C. § 1292(a)(1) · FIN-006 · special assessment · Quorum Case Files Season 9

Disclaimer. This article is published by the Common Interest Community Standards Council for educational and informational purposes only. It is not legal, insurance, or financial advice and does not establish an attorney-client relationship. Descriptions of Mont Claire at Pelican Marsh Condominium Association v. Empire Indemnity Insurance Co., No. 23-14162 (11th Cir. Oct. 31, 2024) (unpublished; binding on the parties only), and Positano Place at Naples I–IV Condominium Associations v. Empire Indemnity Insurance Co., Nos. 22-11059 et al. (11th Cir. Oct. 20, 2023) (published; decided on appealability of an order compelling appraisal, with the merits of that matter not stated here), are drawn from the slip opinions published by the court. Descriptions of Auto-Owners Insurance Co. v. Summit Park Townhome Association, 886 F.3d 852 (10th Cir. Mar. 30, 2018) (published), affirming 100 F. Supp. 3d 1099 (D. Colo.), are drawn from the opinions and recount only the courts’ stated findings; no knowledge or intent is attributed to any person beyond the courts’ words. The Dockside at Ventura matter is ongoing as of this writing and is described solely as reported by FOX 35 Orlando (September 21–22, 2023), WKMG (April 29, 2025), and Law360 docket headlines (January 3 and 17, 2025) concerning Dockside at Ventura Condominium Association v. Voyager Indemnity Insurance Co., M.D. Fla. No. 6:25-cv-00008; the complaint was not reviewed, the association’s claims are allegations, and no outcome is known or predicted. The appraisal clause language quoted is the Summit Park policy’s text as quoted by the Tenth Circuit and is not represented as the text of any other policy; all other descriptions of appraisal, valuation basis, and procedure are general. Questions about a specific association’s coverage, claim, or exposure are questions for association counsel and a licensed insurance professional. CIC-SC, its authors, and its members assume no liability for actions taken in reliance on this content.

Published by the Common Interest Community Standards Council (CICSC). Companion to Quorum Case Files Season 9, Episode 6, and to CICSC Standard FIN-006, Master Policy Insurance Adequacy Review. Part of the CICSC Member Education Library. © 2026 CICSC. Educational use permitted with attribution.