What is an Insurance Policy Appraisal Clause?

When settling a claim, if you and your insurance company disagree on the extent of the loss or the number of damages and the company won't bargain, you can use an appraisal provision in your insurance policy to resolve the dispute.

When it comes to gaining a qualified opinion on the worth of real estate or personal property, you may be familiar with the phrase "appraisal." The procedure of insurance appraisal is, however, unfamiliar to most policyholders. It is anticipated that there will be a nonjudicial method of settling disputes between insurers and insureds when the two parties involved cannot agree on the sum of money an insurer should pay to settle a claim.

When requesting an appraisal, each party must 1) hire its appraiser and 2) split the costs of the appraisal and umpire evenly.

An assessment could be the quickest and least expensive way to resolve a pricing dispute in a claim. A good strategy to resolve claim disputes without spending time and money on protracted litigation is to use an appraisal.

The Evaluation Process

When policyholders and their insurance companies cannot understand the magnitude of the loss or the extent of the damages, an appraisal is a legally binding method that can be used to resolve valuation disputes. The appraisal clause can be started by either the policyholder or the insurance provider, and it is typically done in writing. The appraisal cannot be used to resolve disputes involving coverage-related concerns.

You and your insurance provider must have made an effort to agree on the issue of loss and damages before conducting an appraisal. An appraisal is inappropriate without attempting to reconcile the initial issue between the two parties.

An insurance appraiser is a qualified and unbiased expert who will assess the claim, the property's value, or the loss's extent. When the insurance appraisal clause is used, the insurance company and the policyholder must choose their independent appraiser. Anyone qualified to assess the loss and estimate its value qualifies as an insurance appraiser, including adjusters, contractors, engineers, and other professionals.

Once the appraisers have been chosen, they collaborate to choose an experienced, unbiased, and neutral person to act as the umpire. When the two appraisers cannot agree on the valuation of the property or the amount of a property loss, the umpire makes a binding judgment. A competent umpire can provide an objective assessment based on their competence in the field, such as a retired judge, engineer, contractor, or another professional.

Consider Enlisting an Insurance Lawyer to Make Your Insurance Claim and Handle the Appraisal

Insurance companies pay hundreds of millions yearly for favorable laws and rulings from judges. In that regard, property insurance companies are not in the business of paying valid insurance claims. Consumers should consider hiring an experienced lawyer before making an insurance claim, especially before participating in the appraisal process.

Enlisting a highly skilled lawyer early generally provides the following benefits:

• You don't have to speak with the insurance company,
• The insurance company will have a more difficult time trying to trick you into saying the wrong thing,
• The lawyer will review the policy and file a notice of claim that complies with local laws,
• The lawyer will obtain experts to generate reports to support your claim,
• The lawyer may engage the services of meteorologists to prove weather patterns were ample to cause storm damage to your home.
• The lawyer may obtain the assistance of an estimator to generate an evaluation of your loss.
• The lawyer may enlist the services of a content expert to generate reports on the value of your personal property.
• The lawyer can hire an insurance agent to create a report verifying that the policy covered the type of loss claimed.
• The attorney could hire an engineer to review the causation of your loss.

It's Important to Choose the Right Appraiser

Hiring a professional familiar with all aspects of the appraisal process is essential for success. One of the most crucial elements for a good appraisal is knowing who to pick as an umpire and how to agree with an impartial umpire. Knowing how to bargain and rapidly reach an agreement with the opposing appraiser and umpire is also helpful.

Insurance assessment is a powerful tool for resolving claims disputes when done correctly. You must have a qualified expert on your side who is familiar with the process before requesting an appraisal; otherwise, the insurance company will probably be in a better position. A poorly done appraisal might exacerbate claim issues and cause expensive delays. Be extremely careful when participating in the appraisal process if you do not have an experienced insurance attorney.

Risks and Drawbacks of Insurance Appraisals

When is it inappropriate to use an appraisal to resolve a claim dispute? An appraisal is not advised for problems with policy coverage, policy clauses, deductibles, or how much has already been paid on the claim.

A big enough discrepancy in the disputed value must also exist to justify an evaluation. For instance, if you and your insurance disagree by $5,000, costs alone may consume a large portion of any winnings. However, an appraisal may be more advantageous when an insurance company and policyholder disagree on the extent of loss by $50,000 or more.

The following are additional drawbacks of using appraisal:

• There are no assurances in appraisal; once an award is signed, there are few possibilities for increasing the amount or altering the award other than suing the insurer for contract violation or acting in bad faith.

• Since at least 1-2 months of waiting for the other side's nominated appraiser and waiting to agree on an umpire, appraisals may take longer.

• Experienced party appraisers willing to work for insureds are less common than those who work for insurance companies.

• Additionally, it is more challenging to locate impartial umpires who the insurance carrier's appraiser will accept.

Your best action to settle a big claim disagreement with your insurance company may be to invoke an appraisal clause. If done properly, you can significantly increase the value of your claim without incurring the additional time and costs of protracted litigation. Employing a specialist who is familiar with the procedure is essential. Going at this alone can be fatal. You are wise to get an experienced insurance attorney to assist you with the process.