Many homeowners and business owners find themselves disagreeing with their insurance company’s analysis of their insurance claim. However, most are unaware that they can dispute the insurance company’s findings via the insurance appraisal process! For many, the only available option to resolve a dispute with the insurance company may be a clause buried deep within the policy. It’s called The Appraisal Clause – also know as The Appraisal Provision. Now, don’t let this scare you. It may seem like a fancy clause that would take a law degree to understand. However, the simple way to understand it is that it’s the insurance industry’s version of arbitration. Insurance Appraisal & Arbitration are two separate things. We’ll provide differences later in the article. Can I Use An Insurance Attorney To Dispute My Claim? The Appraisal Clause was developed to curb the number of lawsuits filed against insurance companies where the amount of damages is in dispute.
100,000, from a contractor or insurance claims expert. 30,000. This would be a clear dispute between the amounts of damage. This type of dispute is exactly what the Appraisal Clause was developed to resolve. State regulators have provided parties on both sides of an insurance policy with a less costly mechanism to resolve disputes with the Appraisal Clause. Let’s face it; the courts are filled with lawsuits. The Insurance Appraisal Process allows for the dispute to be settled out of court. It was originally created to help insurance companies; however, it’s actually best for both parties. Using Insurance Attorneys and lawsuits can get tied up in court for years. The Appraisal Provision was designed to keep these disputes out of court for a more timely resolution. In most, if not all states, you will find this rarely triggered a clause in policies. Insurance Claim Attorneys will usually represent policyholders for bad faith practices. Bad Faith is a whole other issue and sometimes happens after the Appraisal Process has been completed.
Bad Faith claims are for much larger suites against insurance companies when it is alleged that they did not act with the good faith of the policy they sold to the policyholder. In summary; disputes between the number of damages and repairs will follow the Appraisal Process before entering into the legal system. Many Insurance Attorneys will also advise the policyholder to engage in the Appraisal Process before any law suites will begin. OK, But How Does It Work? The Appraisal Provision allows the policyholder (you) to hire an independent appraiser to determine the value of their damages. In turn, the insurance company will also hire their own independent appraiser. The two appraisers will then get together and select an umpire. The umpire is basically the arbitrator, or what you might call the judge. If there is a disagreement between the two appraisers, they can present their differences to the umpire for a ruling.
OK; so far so good, the basics of the insurance appraisal process are beginning to come together. We have an independent appraiser for the policyholder. We have an independent appraiser for the insurance company. Finally, there is an Umpire. These three individuals are known as The Appraisal Panel. The object of the Appraisal Panel is to set or determine The Amount of Loss. The Amount of Loss is the total dollar amount needed to return the damaged property back to its original condition, either by repair or replacement. Once the Appraisal Panel is set, the policyholder’s chosen appraiser and the insurance company’s chosen appraiser will review the documents, estimates, and differences between them. The two independent appraisers will try to discuss and resolve the differences in damage and in cost. For example; the insurance company may determine that brick on a home does not need to be replaced. Whereas, the contractor or appraiser for the policyholder says that it does have to be replaced.
One benefit of the Insurance Appraisal Process is that the two independent appraisers have not been subject to the bickering and anger between the policyholder and the insurance company. Basically, it’s the hope that cooler heads will prevail. All the appraisers really have is the amount of the damage and the difference between the two estimate numbers. They do not have the previous baggage or anger that led up to the Appraisal. The process was designed so that these two individuals, who have no interest in the outcome, could discuss a settlement based on the facts presented to them. Sometimes issues arrive where the two independent appraisers can’t agree on certain items. In this event, the two appraisers will submit their differences to the chosen umpire. The three will discuss the issues and try to reach an agreed settlement of the differences. As stated above; the settlement or final number is called The Amount of Loss. The final amount is known as the Appraisal Award.