Appraisal

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re you at a deadlock in settling your claim with your insurance provider?

Have you experienced a covered loss and now find yourself at a standstill due to a disagreement over the value of your property damage claim?

It's not uncommon to face such situations, and the usual recourse involves litigation between the policyholder and the insurance company. Nonetheless, there's an alternative solution you might not know about.

What is the Appraisal Clause?

Most insurance contracts contain an appraisal clause. This provision offers a resolution method that either the policyholder or the insurance company can initiate following a loss and a subsequent dispute over the compensation amount due to that loss. When activated, the policy stipulates that both the insured and the insurer appoint their own independent and impartial appraisers to evaluate the loss by examining the evidence provided by each party. In addition, an umpire, agreed upon by both parties in advance, is appointed should there be a deadlock in the appraisers' evaluations. The settlement figure, as agreed upon by at least two of these three individuals, will be final.

It's crucial to understand that insurance appraisals differ from the appraisal one might get when buying or selling real estate. Insurance appraisals aim to determine the replacement cost and actual cash value of the damaged property, whereas real estate appraisals establish a market value based on comparable sales.

When Should You Invoke the Appraisal Clause?

Knowing what the appraisal clause entails, you might be wondering when it's appropriate to use it. Here are three criteria to help you decide when this option might be suitable.

Firstly, the appraisal clause is relevant mainly to disputes about the extent and cost of repairs for damaged or destroyed property. If your disagreement with your insurer is about "coverage" under your policy, the appraisal clause isn't the right method to resolve that issue. However, if coverage is confirmed and there's a dispute over the settlement amount concerning the scope and cost of repairs, the appraisal clause can be used to address these differences. Here, "scope" refers to the extent of the covered loss, focusing on the quantification of loss. Disagreements about scope involve determining the value lost, while price disputes are about the cost needed for restoration. An appraiser can provide expert advice on the restoration cost, especially regarding building materials and types.

Secondly, the appraisal clause is invoked for significant monetary disputes. Considering the costs involved in the appraisal process, including the appraiser's fees and half of the umpire's fees, it's not a cheap option. Appraisers may charge by the hour or a flat rate, depending on the complexity of the claim. While the insurance company covers their appraiser and half of the umpire's fees, you should weigh the potential financial gain against the appraisal expenses. The disputed amount must justify the costs of the appraisal process.

Lastly, the appraisal clause can be a solution when communication has broken down. If discussions regarding the settlement amount have reached an impasse and communication with your insurance company or adjuster has ceased, seeking an independent external party might be necessary. A lack of communication could indicate it's time to explore an alternative resolution.

Whether invoking the appraisal clause is the best action for your situation, understanding your options is crucial for making an informed decision on your path to recovery. Miller Public Adjusters is here to assist you in navigating your claim recovery process. Our experienced appraisers have supported numerous clients dissatisfied with their claims process. We're ready to help you move forward and begin your journey to recovery. Please reach out to us for a complimentary claim review today.