| Many homeowners and business owners find | | | | highway. The Appraisal Panel's job is not to determine |
| themselves disagreeing with their insurance company's | | | | who's at fault, the policy coverage limit, if the truck had |
| analysis of their insurance claim. However, most are | | | | a registration, or anything other than "How Much is the |
| unaware that they can dispute the insurance | | | | Piano Worth." |
| company's findings via the insurance appraisal process! | | | | As with our example earlier, if the insurance company |
| Even though the policyholder (you) submits a | | | | offers a settlement of $10,000 to repair a roof and the |
| contractor's estimate, receipts for repairs or materials, | | | | policyholder has contractor bids for $15,000, then the |
| or even photos showing damages that the insurance | | | | Appraisal Process may not be the best option. The |
| company did not include for repairs... they still won't | | | | Appraisal Process may cost more than the $5,000 |
| budge. | | | | that's being disputed. Unfortunately, the differences in |
| Most policyholders are unaware of how to dispute and | | | | repair/replacement costs are usually much greater. |
| resolve their claim with the insurance company. | | | | When an insurance company generates an estimate |
| Policyholders have a choice and a voice within their | | | | for a claim of $75,000 and the policyholder has |
| policy for this very purpose. It's called The Appraisal | | | | acquired professional bids several contractors of |
| Clause - also know as The Appraisal Provision. Now, | | | | $200,000 or more, its time to invoke the appraisal |
| don't let this scare you. It may seem like a fancy | | | | clause. |
| clause that would take a law degree to understand. | | | | Beginning The Appraisal Process |
| However, a simple way to understand it is that it's the | | | | Either party associated with the policy can invoke the |
| insurance industry's version of arbitration. Although | | | | Appraisal Process. However, such a request must be |
| similar, the Appraisal Process is NOT an arbitration or | | | | made in writing. Each policy will have a time limit of |
| mediation and the umpire is not an arbitrator, mediator, | | | | when this can take place. Even if a claim has been |
| or judge. Insurance Appraisal, Mediation, and Arbitration | | | | closed for many years, either party can still dispute the |
| are separate things. | | | | claim and reopen for review. It's recommended that |
| In short; Arbitration requires attorneys and a legal | | | | the request to invoke appraisal be sent via certified |
| process, where Insurance Appraisal does not require | | | | mail. Once the request to invoke the Appraisal Clause |
| attorneys or a legal process. Arbitration is a dispute | | | | has been initiated, as explained earlier, each party, the |
| between two parties for any reason, where as, the | | | | insurance company and policyholder, appoints an |
| Insurance Appraisal Process is a dispute between the | | | | Independent Appraiser. (If you wish to invoke the |
| "value or cost," to repair or replace property only - bee | | | | appraisal clause in your policy you need to submit a |
| it an automobile, plane, train, couch, house, commercial | | | | letter to your insurance company. Find more |
| building, etc. | | | | information at ) |
| Most Policies Have the Appraisal Clause | | | | Choosing An Independent Appraiser |
| If you feel you're at a dead end with your insurance | | | | It's important to select an Independent Appraiser that |
| company and want to resolve your claim you'll need to | | | | has experience with the damages being disputed in the |
| check your policy for the Appraisal Clause. Most | | | | claim. A person with expert knowledge of insurance |
| policies will have the provision listed under the "What to | | | | claims handling and firsthand knowledge of the |
| do after a loss," section or the "Conditions" section of | | | | damaged property and its replacement cost. For |
| the policy. Below, you will find a sample of a typical | | | | example; a person with expert knowledge of |
| Insurance Appraisal Clause included in most policies. | | | | insurance claims handling and with expert knowledge |
| Keep in mind that policies can be different in each | | | | of the Appraisal Process, with little experience on the |
| state. Therefore, you should read your own policy to | | | | costs to replace an antique grand piano may not be |
| see if this clause exists. It will say something similar to | | | | the best choice. In the case of a home or building fire; |
| the following ; | | | | a good Appraiser is someone who can generate their |
| "APPRAISAL - If you and we fail to agree on the | | | | own line-item detailed estimate to repair or replace the |
| amount of loss, either one can demand that the | | | | damaged property, can secure multiple bids from |
| amount of the loss be set by appraisal. If either makes | | | | reputable contractors to back up their findings, knows |
| a written demand for appraisal, each shall select a | | | | building codes, and can articulate unforeseen costs of |
| competent, independent appraiser. Each shall notify the | | | | repairs. If a building has historic features with materials |
| other of the appraiser's identity within 20 days of | | | | like, solid Adler doors, large detailed moldings, and |
| receipt of the written demand. The two appraisers | | | | custom cabinets, a great amount of research with a |
| shall then select a competent, impartial umpire. If the | | | | salvager may be needed. The Appraiser should have |
| two appraisers are unable to agree upon an umpire | | | | experience with building procedures, materials and the |
| within 15 days, you or we can ask a judge of a court | | | | cost of such terms to create an accurate "amount of |
| of record in the state where the residence premises is | | | | loss," to return the property to the same condition it |
| located to select an umpire. The appraisers shall then | | | | was prior to the loss. See, the policy provides |
| set the amount of the loss. If the appraisers fail to | | | | coverage to replace the damaged property with those |
| agree within a reasonable time, they shall submit their | | | | of like kind and quality. An Independent Appraiser that |
| differences to the umpire. Written agreement signed | | | | is not familiar with, or that does not have experienced |
| by any two of these three shall set the amount of the | | | | contractors, engineers, and other experts to consult |
| loss." | | | | with about mold, demolition, cost associated with |
| OK, But How Does the Insurance Appraisal Process | | | | contents, and in some cases, additional living expenses, |
| Work? | | | | does not sound like a good candidate. You should |
| The Appraisal Process allows the policyholder (you) to | | | | choose your Independent Appraiser wisely. Look and |
| hire an independent appraiser to determine the value | | | | interview someone with experience of the type of |
| of their damages. In turn, the insurance company will | | | | damage you have and with the type of property |
| also hire their own independent appraiser. The two | | | | damaged, as well as a specialist when it comes to the |
| appraisers will then get together and select an umpire. | | | | Insurance Appraisal Process and also Insurance Claims |
| The umpire is basically the arbitrator, or what you | | | | Handling. |
| might call the judge. If a disagreement between the | | | | Many people confuse the words Independent |
| two appraisers arises, they can present their | | | | Appraiser with that of a real estate appraiser. As you |
| differences to the umpire who will make a ruling. | | | | can see, a real estate appraiser is far from what is |
| OK; so far so good, the basics of the insurance | | | | needed for an Insurance Appraisal. An Independent |
| appraisal process are beginning to come together. We | | | | "Insurance," Appraiser is an insurance claims expert on |
| have an independent appraiser for the policyholder. | | | | costs and processes to repair or replace damaged |
| We have an independent appraiser for the insurance | | | | property. The next question is, "Who will have such |
| company. Finally, there is an Umpire. These three | | | | knowledge?" People requesting assistance in the past |
| individuals are known as The Appraisal Panel. The | | | | have asked if the following experts with the following |
| object of the Appraisal Panel is to set or determine | | | | backgrounds are good choices ; |
| The Amount of Loss. The Amount of Loss is the total | | | | |
| dollar amount needed to return the damaged property | | | | 1. Structural Engineers: This person may be a structural |
| back to its original condition, either by repair or | | | | expert and could probably provide a good estimate to |
| replacement. | | | | replace a building, but what about the contents |
| Once the Appraisal Panel is set, the policyholder's | | | | (furniture, food, etc.) damage? Do they know anything |
| chosen appraiser and the insurance company's chosen | | | | about the insurance policy, the claims process, the |
| appraiser will review the documents, estimates, and | | | | software used by insurance companies, the Appraisal |
| differences between them. The two independent | | | | Process? |
| appraisers will try to discuss and resolve the | | | | 2. Construction Attorney: A Construction Attorney |
| differences in damage and in cost. For example; the | | | | most likely has knowledge of construction contracts |
| insurance company may determine that brick on a | | | | and issues that building contractors have. Do they |
| home does not need to be replaced. Where as, the | | | | know anything about the insurance policy, the claims |
| contractor or appraiser for the policyholder says that it | | | | process, the software used by insurance companies, |
| does have to be replaced. The two appraisers will | | | | the Appraisal Process, the contents damaged? |
| discuss their reasons for their position and try to come | | | | (NOTE: If you retain an attorney as Appraiser, |
| to an agreement, first if it should be repaired or | | | | remember, there is NO attorney/client privilege |
| replaced, and secondly the cost to return the brick | | | | because the attorney is being hired as an Appraiser, |
| back to it's original condition prior to the loss. | | | | not as an attorney.) |
| One benefit of the Insurance Appraisal Process is that | | | | 3. Construction Superintendent or General Contractor: |
| the two independent appraisers have not been subject | | | | Again, excellent choice for generating a structural |
| to the bickering and anger between the policyholder | | | | estimate, but is most likely not familiar with insurance |
| and the insurance company. Basically, it's the hope that | | | | claims... and even more importantly, the Insurance |
| cooler heads will prevail. All the appraisers really have | | | | Appraisal Process. |
| is the amount of the damage and the difference | | | | 4. Insurance Claim Attorney / Lawyer: Keep in mind |
| between the two estimate numbers. They do not | | | | that the process was designed to keep these types |
| have the previous baggage or anger that led up to the | | | | of disputes out of court. You can surely use an |
| Appraisal. The process was designed so that these | | | | attorney as your appraiser; however, the fees can |
| two individuals, who have no interest in the outcome, | | | | exhaust your reward. Attorney's fees range between |
| could discuss a settlement based on the facts | | | | 30% and 40% of the amount collected. This will dig |
| presented to them. | | | | deep into the net amount you receive. An Insurance |
| Sometimes issues arrive where the two independent | | | | Attorney will also have expert knowledge of the policy. |
| appraisers can't agree on certain items. In this event, | | | | However, the Appraisal Provision clearly notes that no |
| the two appraisers will submit their differences to the | | | | policy provisions will apply. Has the attorney |
| chosen umpire. The three will discuss the issues and | | | | represented their clients in many appraisals or mostly in |
| try to reach an agreed settlement of the differences. | | | | court cases? How familiar are they with the Appraisal |
| As stated above; the settlement or final number is | | | | Process, building costs, construction practices, the |
| called The Amount of Loss. The final amount is known | | | | contents damaged? Does the attorney know anything |
| as the Appraisal Award. The Award is signed by the | | | | about the software used by insurance companies? |
| individuals who agree on The Amount of Loss. | | | | (NOTE: If you retain an attorney as Appraiser, |
| However, only TWO of the three individuals need to | | | | remember, there is NO attorney/client privilege |
| agree. (An agreement between the two independent | | | | because the attorney is being hired as an Appraiser, |
| appraisers, or the umpire and either appraiser) Once | | | | not as an attorney.) |
| any TWO of the three individuals on the Appraisal | | | | 5. Independent Insurance Appraiser: Doesn't it make |
| Panel sign the award... the dispute is over! The amount | | | | sense to hire an individual who is an expert of the |
| on the Award binding and is paid by the insurance | | | | process in which you are about to engage? You've |
| company, to the policyholder. | | | | heard the expression, "Would you go to your auto |
| Can I Use An Insurance Attorney To Dispute My | | | | mechanic if you needed brain surgery?" It is highly |
| Claim? | | | | recommended to use a qualified, professional, |
| The Appraisal Clause was initiated to lower the | | | | Insurance Appraiser. This professional will already |
| number of lawsuits filed against insurance companies. | | | | know the Insurance Appraisal Process. They will also |
| The courts found that many lawsuits were entering | | | | have qualified professionals (engineers, contractors, |
| the legal system where the cost to repair or replaced | | | | inspectors, etc.) at there disposal to back up their |
| damaged property was being disputed. In many cases | | | | analysis. |
| the suites were being resolved when professional | | | | Regardless of background, an Independent Appraiser |
| engineers and contractors could address the issues. | | | | will also require good communication skills and agree |
| The Appraisal Process was created to get such | | | | with the position they are defending. They should know |
| individuals together and keep these disputes out of the | | | | about the insurance policy, the claims process, the |
| courtroom. Assuming you acquired an estimate of | | | | software used by insurance companies, the Appraisal |
| repair to your property for $100,000, from a contractor | | | | Process, contents damage, structural damages, building |
| or insurance claims expert. Your insurance company | | | | costs and processes, as well as materials and building |
| has created an estimate for $30,000. This would be a | | | | codes. Makes sense, right? |
| clear dispute between the amounts of damage. This | | | | Advantages to the Insurance Appraisal Process |
| type of dispute is exactly what the Appraisal Clause | | | | There are several advantages to the Insurance |
| was developed to resolve. | | | | Appraisal Process. The most obvious is costs. |
| The clause allows parties on both sides of the | | | | Insurance Attorney's will usually charge 30% to 45% |
| insurance policy to dispute their differences using this | | | | of the total award. On a $200,000 claim, the attorney's |
| less costly provision. Let's face it; the courts are filled | | | | fee would be in the range of Sixty to Ninety-thousand |
| with lawsuits. The Insurance Appraisal Process allows | | | | dollars ($60,000 to $90,000). That can hurt a |
| for the dispute to be settled out of court. Using | | | | policyholder trying to rebuild their life. Remember, the |
| Insurance Attorneys and lawsuits can have insurance | | | | Insurance Appraisal Process was designed to keep |
| claims tied up in court for years. The Appraisal | | | | these disputes out of the courtroom. |
| Provision was designed to keep these disputes out of | | | | The advantage of invoking appraisal allows for a less |
| court for a less costly and timelier resolution. | | | | formal or non-legal proceeding. An Independent |
| Insurance Claim Attorneys will usually represent | | | | Appraiser usually charges in the range of $125 to $200 |
| policyholders for bad faith practices. Bad Faith is a | | | | per hour. Using the same example above with an |
| whole other issue and sometimes happens after the | | | | award of $200,000; if the dispute took 25 to 50 hours, |
| Appraisal Process has been completed. Bad Faith | | | | the cost would be in the range of Five Thousand to |
| claims are for much larger suites against insurance | | | | Ten Thousand dollars ($5,000 to $10,000). This can be |
| companies when it is alleged that they did not act with | | | | a significant difference. |
| good faith of the policy they sold to the policyholder. In | | | | Another advantage is time. The courtroom can delay |
| summary; disputes between the amount of damages | | | | an insurance claim dispute for years, where the |
| and repairs will follow the Appraisal Process before | | | | Appraisal Process usually only takes a few months. |
| entering into the legal system. Many Insurance | | | | Sometimes it can last longer depending on the |
| Attorneys will also advise the policyholder to engage in | | | | complexity of the claim. However, the courtroom will |
| the Appraisal Process before any lawsuits will begin. | | | | most certainly be longer. The result of less time and |
| How Do I know if the Insurance Appraisal Process is a | | | | less cost becomes a less of a burden for both sides |
| Good Option for My Claim? | | | | of the dispute. |
| If the Appraisal Clause is in your policy then it is always | | | | Once an award is signed the insurance company has |
| an option. However, it's wise to point out that Appraisal | | | | 30 to 60-days (depending on state) to settle the |
| is usually an option when there is a substantial | | | | award. |
| difference in the amount between the two estimate | | | | Should I Invoke the Appraisal Clause For My Claim? |
| totals. For example; let's say a fire completely destroys | | | | When the dispute is real and the damages are real, |
| a house and the homeowner's personal property within | | | | the policyholder usually see's a greater return at the |
| it (Know as the Contents). The differences between | | | | end of the appraisal. If the policyholder's claim is |
| what the insurance company wants to pay and what | | | | supported by an Insurance Claims Expert, building or |
| you wish to receive is $5,000. In this situation, the | | | | repair contractors, or an engineer - and the amount of |
| Appraisal Process is not the best idea. After paying | | | | money between the two estimates is large, the |
| the fees involved for the appraisal, you may not end | | | | Appraisal Process is a no-brainer. However, if a |
| up with much of the $5,000 being disputed. | | | | contractor or Public Adjuster is trying to beef-up the |
| Now, if we take the same fire that destroys the | | | | damages for their own benefit, then it's the policyholder |
| property and the dispute between the policyholder and | | | | that pays dearly for it. If you're considering invoking |
| the insurance company is $40,000, appraisal should be | | | | appraisal on your claim you should consult an insurance |
| considered. The policyholder now has a chance to | | | | claim expert to see if it's worth your time and effort. |
| recover substantially more money than originally | | | | Being that the Appraisal Award is binding the |
| offered. | | | | policyholder should be sure before they cost |
| Also, the Appraisal Clause is only applicable if a dispute | | | | themselves unwanted anguish. If the outcome of your |
| arises from a covered loss. If the insurance company | | | | Appraisal Award is not what was to be expected, |
| denied the claim as something not covered then this is | | | | both parties must live with the result. As stated, the |
| not a dispute on the amount to repair, but rather a | | | | Appraisal Award is binding on "both parties." |
| dispute on coverage. For example; homeowners and | | | | At the end of the day nothing is risk free. There are no |
| business policies due not cover floods. Flood policies | | | | promises or guarantees with the outcome of any |
| are purchased separately. So, if there is no coverage | | | | Appraisal. However, if you have a dispute over |
| for the flood damages then the Appraisal Process is | | | | $20,000 you're more than likely to have a result you |
| not an option. | | | | can live with. Do your homework and remember to |
| Simply put, the Insurance Appraisal Process is to | | | | choose an Independent Appraiser that is educated and |
| determine the "amount of loss," to property only. The | | | | experienced with the type of damages you have, |
| Appraisal Panel is not to determine coverage, policy | | | | what caused the damage, and the type of property |
| provisions, deductibles, how much was previously paid | | | | damaged. Keep in mind that this is "YOUR," property |
| on the claim, etc. Let's say there was an appraisal for | | | | and "YOUR," insurance policy. Your policy protects you |
| a grand piano that fell off a delivery truck on the | | | | with the Insurance Appraisal Process, so that... |