Independent Appraiser – Insurance Appraisal Process Protects Policyholders

Most insurance policies have an appraisal clause. This allows the parties to the contract to settle a dispute about the “amount loss”. The amount needed to complete repairs due to a covered event. To protect their interests, a policyholder might be required to hire an appraiser.

An example of how an independent appraiser helped protect a policyholder against serious insurance company errors is a Texas case. Each case is unique, depending on how the appraisal clause in the contract is written, the type and extent of the loss, as well as all other facts.

The policyholder was the owner of five buildings in North Richland Hills (Texas) at the time. The roofs of five buildings were damaged by hailstorm. The policyholder filed a claim with his insurance company. After their adjuster found that the roofs didn’t need to be completely replaced and that hail damage did not exceed the $5,000 deductible, the insurance company initially denied the claim.

The adjuster’s findings were rejected by the policyholder. The insurance company invoked its contractual right of appraisal. Although the policyholder attempted to bring the matter to court by filing suit, the judge forced the parties to agree on the appraisal process. This is not uncommon for courts to suggest, since most policies require that all policy provisions are exhausted before a case can be filed.

Two independent appraisers are hired by each party and an appraisal umpire. The umpire can accept disagreements from independent appraisers if they are unable to agree on the amount of loss. In this appraisal process, the umpire found for the policyholder and awarded $423,053.96. Appraisal awards can be binding and the insurance company paid the amount. (You might recall their initial offer of $0 because they found the loss below $5,000.

The United States Fifth Circuit heard the appeal of the policyholder. He claimed he was entitled more insurance proceeds to cover his damages and was also seeking additional funds for what he believes was “bad faith” by the insurance company as well as their poor handling of the case.

According to Texas law, appraisal awards made under an insurance contract are binding. The Court stated that every reasonable presumption is allowed to support an appraisal award. A binding appraisal can only be disregarded in the following situations, according to the Court:

“(1) When the award was made in error;

(2) When the award was made due to fraud, accident, mistake, or

(3) When the award was not in conformity with the policy’s requirements.

The court overruled the policyholder on all three points. This case provides a great example of how Texas courts view the appraisal process. In conclusion, I believe that the Independent Appraiser as well as the Appraisal Process worked in the best interest of the policyholder. Because of the efforts of the Independent Appraiser, and the Appraisal process, the policyholder received $418.053.96 more than what his insurance company would pay.

For assistance with the insurance appraisal process, contact an Independent Appraiser if you are involved in a dispute over an insurance policy. We specialize in Insurance Appraisal Services. Insurance Claims Group, Inc. can be reached at 919-669-9111 for all your questions about insurance appraisals.

Copyright of Insurance Claims Group, Inc. and Joseph P. Brennan. Joe Brennan is the President and Owner/Operator of Insurance Claims Group, Inc., which is a national independent adjusting, appraisal, umpiring, and umpiring company. Joe has been involved in property loss for over 24-years. He is well-versed in the appraisal process, and has served as an umpire and appraiser on numerous claims.