Insurance Claim Appraisal
What is an insurance claim appraisal?
Appraisal is a policy provision found in your insurance policy which can help resolve a disagreement on the amount of money approved by your insurance company for an insurance claim. Simply stated, this is when you and your insurance company do not agree on the dollar amount for your claim. This is an alternative to hiring a public insurance adjuster or going to a lawsuit. Appraisal does not address coverage issues, but can include or exclude items based on causation depending on the state.
When is it appropriate to demand appraisal?
Sometimes there is a disagreement over the insurance company’s valuation of an insurance claim. Many policyholders often believe the only way to settle a dispute from your claim is to hire an attorney. This is not always the case. Appraisal is a method of alternative dispute resolution commonly found in homeowners and commercial insurance policies.
Your insurance company may demand appraisal for a few reasons (These are based on actual experiences):
1) The adjuster’s caseload is so heavy, it takes the claim immediately off of their hands. All responsibility is taken off of their hands in the claim negotiation, or contact with the policyholder, contractor, or public insurance adjuster.
2) They are tired of working with a policyholder, contractor, or public insurance adjuster, when they are in the wrong.
3) Many adjusters rely on estimating software used by all carriers and most individuals who negotiate insurance claims. The two used by carriers are Xactimate & Symbility. Contractors invoices which contain actual charges for repairs can and do get ignored as many adjusters want to only pay what the estimating software states should be the payout. Estimating software is exactly that what it means, not actual costs. On the flip side, Xactimate on a more accurate basis will have accurate material and labor costs to complete repairs from a claim. This is not always the case, but it is very reliable. Symbility, depending on the type of claim, may or may not pay what is actual market value.
4) Your insurance carrier believes the amount of loss is accurate.
How does the appraisal process work?
The language for an appraisal in your policy reads generally as follows:
If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the “residence premises” is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
What happens after the appraisal?
OUTCOME #1
OUTCOME #2
If both appraisers fail to agree on the amount of loss, they will submit their difference to a pre-selected umpire. An umpire selection is agreed to by both appraisers, or designated by the courts before the appraisal starts. The umpire will set the amount of loss by working through both appraisers’ work product. That amount awarded will be legally binding.
An umpire is someone who is registered with the state who has expertise in the field in which the appraisal exists. If you have a roof claim appraisal, your umpire will be an expert and have extensive experience in roofing.
The expense of an umpire is divided equally between the insurance carrier and the policyholder. There is no standard rate for umpire services in the State of Texas.
Both appraisers agree on the amount of loss and your insurance company will pay out the claim accordingly. At that point in receiving funds, you can start the restoration process of your property.