What if you and your adjuster/insurance agency are still at a deadlock over the value of your property after all that you have done? Now it’s time to invoke your insurance policy’s Appraisal Clause. The Appraisal Clause can be found in all insurance policies. It was created to provide a process for disputing amounts to be settled by non-interested parties. You will find the appraisal clause in every homeowner policy. It is also in all policies that cover commercial buildings.
The Appraisal Clause can be found under the heading “Conditions” or “What to do after an loss.”
Do not confuse the Appraisal process and Arbitration. The Appraisal Clause doesn’t bind any party to its findings. Arbitration is a binding process in which both the arbitrator and the parties are bound by his findings.
The Appraisal Clause was created to determine disputed values. The Appraisal Clause cannot be used for determining what is covered. This is a matter for the court of law. To resolve a dispute between you and the company about whether something is covered, you can file a lawsuit against your insurance company.
Here’s a very important tip! The Appraisal Clause can be invoked at any time, not just when you are in a deadlock with your adjuster or insurer. Insurers are more familiar with the terms and conditions of their policies, so the Appraisal procedure is often invoked. You, the policyholder or insured, can perform it at any time.
I don’t mean to suggest that you stop cooperating. Sometimes, however, I speak to people who have real problems with their adjuster and insurance company. Sometimes, all the drama is stopped by taking the claim to Appraisal.
As both an appraiser as well as an umpire, my experience has shown that appraisal can resolve disputes more quickly than litigation. The cost of appraisal is significantly less than that of litigation.
Here is what the Appraisal Clause looks like in my Homeowners Insurance policy.
“If we cannot agree on the amount, one of us may demand an appraisal. Each party will make their choice in this instance
Within 20 days of receiving a written request, a competent appraiser will be available
From the other. One of the appraisers will be chosen as an umpire. If they
If you and we cannot agree on an umpire in 15 days, we or you may request
The state court of record will make the decision.
Where the “residence premises are located”. Appraisers will identify the “residence premises”.
Separately, determine the loss amount. If an appraisal is submitted by appraisers,
agreement with us, the amount of the loss will be the amount agreed upon
They will not be able to reach an agreement if they do not agree.
The amount of loss will be determined by the agreement of both parties.
Each party will:
A. pays its own appraiser and
b. Be responsible for all other expenses, including umpire and appraisal. “
Each party nominates an impartial, uninterested appraiser. My past experience has shown me that the policyholder or insured may try to appoint a Public Adjuster, who will handle his claim, as the appraiser. This is a bad idea, since the PA is not impartial.
Independently, the appraisers will evaluate the loss. They can negotiate to agree on a amount of damages. If they are unable to agree, they can still negotiate and reach an agreement on the amount of damages. If they are unable to agree on the selection, one side can appeal to the court to have someone appointed to that position.
A good umpire should be impartial and have a good reputation. He must also be open to listening. It is unacceptable to choose an umpire who has any financial interest in the outcome. It is unacceptable to accept any other compensation than the hourly rate for umpires.
After the umpire is chosen, each appraiser will present their loss assessment. This is often done with informal testimony from all parties to the claim. The umpire will often meet the appraisers at the location of the loss to review the details. Both parties will receive a written decision from the umpire. The amount of the loss will be determined if both parties agree. If one party does not agree to the amount of the loss, the case can be transferred to legal counsel for litigation.
Question Can the insured or the insurer refuse to accept the choice of the appraiser made by the other parties?
Answer: The New York Department of Insurance issued the following ruling in 2005:
“Whether or not an appraiser appointed by one of the parties is competent, disinterested (or “independent”) is a matter of fact for a jury. It is beyond the jurisdiction of this Department.
A TIP ANOTHER! Another tip! Make sure you notify your adjuster and choose your appraiser within the specified time limits. Each side must choose an appraiser within the time limit.
Pay attention to ensure that the adjuster and/or insurance company choose their appraiser within the time limit. They may have violated their policy’s terms and conditions if they don’t. For violations of unfair claims practice, you can file a complaint to your state’s Department of Insurance.
In the event of an appraisal I recommend calling a Claims Consultant. A public adjuster company might be an option. The PA or Claims Consultant are familiar with insurance policies and the Appraisal Clause. They also know property values. A PA or Claims Consultant are ideal choices to help you prove the value of your claim’s property.
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