Understanding the Insurance Appraisal Process: Resolving Claim Disputes
When disagreements arise between policyholders and insurance companies over the cost of repairing or replacing damaged property, navigating the resolution process can be frustrating. Fortunately, many property insurance policies offer an appraisal clause—a valuable alternative dispute resolution method that focuses on determining the value of losses.
Here’s a step-by-step explanation of how the appraisal process works:
Step 1: Identify the Dispute
Disputes typically arise when there are disagreements about the value or extent of the loss. Appraisal cannot resolve disputes about coverage issues but is effective for valuation disagreements.
Step 2: Select Appraisers
Each side (the policyholder and the insurer) selects a qualified appraiser. Together, the appraisers choose a neutral umpire. If they can’t agree on an umpire, a court may appoint one. The umpire’s role is to make a final decision if the appraisers can’t agree.
Step 3: Appraisers Select an Umpire
Together, the appraisers choose a neutral umpire. If they can’t agree on an umpire, a court may appoint one. The umpire’s role is to make a final decision if the appraisers can’t agree.
Step 4: Review Evidence
The appraisers examine evidence such as photographs, documents, and other supporting information.
Step 5: Agreement Reached?
The appraisers attempt to agree on the value of the disputed items.
Step 6: Deliberations
If the appraisers cannot reach a consensus, the dispute is submitted to the umpire. The umpire reviews the evidence, mediates where possible, and participates in discussions.
Step 7: Award Rendered
A binding decision, known as the “award,” is reached when at least two out of the three (the two appraisers and the umpire) agree. This award determines the amount of the loss and triggers the next steps for payment or resolution.
Key Notes
- Coverage Disputes: The appraisal process cannot address coverage-related disagreements.
- Binding Results: Awards are generally binding unless there is evidence of fraud or misconduct.
- Costs: Each party pays their appraiser, and the umpire’s fee is typically split equally.
Frequently Asked Questions (FAQs)
If you and your insurance company disagree on the cost of repairs or replacement, you may invoke the appraisal clause in your policy. Each side selects an appraiser, and they choose a neutral umpire. The appraisers independently assess the damages, then work to reach an agreement. If necessary, the umpire will make the final decision.
Appraisal can be a good option if your dispute involves significant differences in the value or scope of repairs. However, it does not address coverage issues, so it’s important to review your policy terms.
If your insurance company is unresponsive, if there’s a significant gap in the estimated cost of repairs, or if communication has broken down, appraisal may be a suitable option.
You’ll pay for your appraiser’s fee and half the cost of the umpire if one is needed. Costs depend on the complexity of the claim and the professionals’ hourly rates.
Not all insurance policies include an appraisal clause. If you’re unsure, review your policy or consult a professional. Feel free to send us a copy of your policy to review.
No, appraisal only determines the value of losses and does not address coverage issues or liability disputes.
Awards are binding unless you can prove fraud or misconduct. Ensure you understand the risks before beginning the appraisal process.
Depending on your policy, invoking appraisal may limit your ability to litigate. Review the terms carefully or seek legal advice before proceeding.