"If your insurance company is underpaying your property claim or refusing to pay for certain covered property damage the insurance appraisal process might be right for you. Insurance appraisal can deliver a fair indemnity award cheaper and faster than the legal process and is usually a binding settlement which the insurance company must pay."
We have the experience and expertise required to serve in the capacity as an insurance appraiser or insurance umpire in insurance appraisal disputes. We have achieved favorable results for our clients acting as an appraiser and have brought difficult matetrs to fair resolutions when acting in the capaicty of an insurance umpire. We are known to be diligent, tough and fair in providing our services.
What is Insurance Appraisal?
When disagreements arise over the value of the
damaged or destroyed property and repairs many insurance policies contain provisions allowing for a much faster and less costly manner of determining value versus litigation.
Specifically, policies often contain an Appraisal provision for settling disputes over the amount of the claim, outside of litigation. This provision can streamline the valuation process. If the parties
dispute the value of the property claim, the appraisal process may save time and fees. However, the scope of the appraisal process is not meant to address disputes over coverageand does not turn on liability or the insurer’s right to claim coverage defenses. The insurance appraisal process is limited to making a determination as to the value of the property and/or cost of covered repairs in question.
A demand for appraisal may be initiated by either the policyholder or the insurance company, and generally, no formal process is required. One party must merely advise the other that it seeks an appraisal of the property due to the parties’ failure to reach a consensus. Appraisal is an available means to try to settle a property claim when disputes over teh amount of loss exits, although this mechanism to resolve insurance disputes it is not always mentioned by insurance companies.
While either party can demand an appraisal, there is generally no requirement that such an appraisal
be completed prior to initiating litigation unless the express language of the insurance contract
unequivocally states otherwise. Nevertheless, once either party so demands an appraisal under the
terms of the contract, the other party is bound to participate.
Due care must be used following the demand of an appraisal because at least one court in Illinois
has held that the appraisers’ findings are binding on both parties. (See Hetherington v. Continental Ins.
Co., 311 Ill. App. 577, 37 N.E.2d 366 (4th Dist. 1941) (stating “[i]n the absence of fraud, collusion,
mistake, or malfeasance, the findings of the appraisers will be binding on both parties.”)
Although appraisal proceedings are often compared to arbitrations, the two areas are distinct. An
appraisal permitted by a policy of insurance is a relatively limited process compared to arbitration. An
appraisal is primarily concerned with ascertaining the value of property or the amount of loss. Unlike
in arbitration, an appraiser does not resolve questions of law or interpret contract language.
Thus, where issues of coverage are involved, an appraisal is an improper avenue for resolution. The
appraiser’s primary function is to ascertain the value of property rather than to interpret contract
Who can be an appraiser and how does the process work?
Appraisers are generally similar to mediators and arbitrators, who have knowledge of the procedures and policies for property claims and subject knowledge of the type of damage being appraised. Insurance adjusters, contractors, attorneys, engineers, accountants and other speciality subject matter experts often serve as appraisers and/or insurance umpires.
Each party has the ability to appoint their own appraiser. The two appraisers then elect and thire appraiser, known as an “insurance umpire" to settle any differences that the two appraisers cannot agree upon and to issue an award. The umpire is called in when the two appraisers cannot reach individual values on certian items or a single value for the claim in question. Then the umpire attempts to reconcile the differences between the two appraisers and ultimately may determine the property’s value known as an "award".
While the parties generally seek the appointment of individuals who have no direct interest in the outcome to the extent that they are “impartial,” just like arbitrators, appraisers do act as advocates for their side. An appraiser may consult with the party by whom he or she has been retained to determine whether that figure is indeed reasonable.
Because there is no burden of proof in the appraisal process, there are no evidentiary rules.
Generally, both sides agree on the format in which information regarding the loss is compiled, and
either party may present information that bolsters his own appraised value or defeats the appraised
value of the other. Both parties may inspect the property or prior documentation so that due diligence can be completed. This process allows the parties to reach a conclusion as to the value of the property
without the need for an umpire.
The appraisal hearing is generally informal. Rarely must the parties themselves give evidence at an
appraisal hearing, as it is the appraisers who have the skill and expertise in valuing the destroyed
property and estimating repairs and/or replacement costs. Each insurance appraiser may ask his or her party to verify the scope and unique qualities
of the property, the lost contents and the like. The appraisers then use that information to place a value
on the property.
The appraisal provision contained in homeowners policies allows for a quick, economical way in
which to determine how much money is owed for repair, replacement, or rebuilding costs associated
with destroyed property, other related costs or business income losses.
There are pros and cons for both the insured and the insurer in seeking an appraisal. These, however, may be overcome by the costs saved should litigation be
necessary following completion of the project.
Typical Insurance Policy Appraisal Provisions
"If we and you disagree on the value of the property or the amount of the loss, either maymake written demand for an appraisal of the loss.
In this event, each party will choose a competent appraiser within twenty (20) days after receiving a written request from the other. The two appraisers will choose a competent and independent umpire. If they cannot agree upon an umpire within fifteen (15) days, you or we may request the choice be made by a judge of a court of record in the state where the Described Property is located. The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed by any two will set the amount of the loss.
Each party will:
a. Pay its chosen appraiser; and
b. Bear the other exepnses of the appraisal and umpire equally."