When a home or business is damaged and the claim reaches an impasse, the appraisal process included in most commercial and residential insurance policies can serve as an alternative dispute resolution method to avoid litigation or at least resolve portions of the claim.
APPRAISAL — If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal…The appraisers shall then set the amount of the loss…They shall submit their differences to the umpire…Written agreement signed by any two of these three shall set the amount of the loss.
It is the job of an appraiser to assess and evaluate the damage and provide an impartial, informed estimate of the value of the loss. The policyholder and the insurance company both will have their own independent appraiser assess the damage, and if the two appraisers cannot agree then a third appraiser will be used to resolve the differences. The third appraiser is called an umpire and is either agreed between the appraisers or appointed by a court having jurisdiction. Appraisal boils down to an agreement of two of the three appraisers.
Understanding the Appraisal Process
Typically, insurance companies include an appraisal clause in each policy and it can be located in the table of contents. The appraisal clause stipulates that in the event that the property owner and the insurance company cannot agree on the value of the loss, either party may demand and, in some occasions, both parties must agree to an appraisal. Each party selects an appraiser and the two appraisers one from the policyholder and one from the insurance company work together to agree on the value of the damaged property. A mutually agreed or court appointed umpire will handle any disputes between the appraisers and any agreement signed by two of the three will set the value of the loss.
Selecting an Appraiser to Help
Appraisal has been successfully quietly resolving disputed losses for 150 years without any licensure of its appraisers. This continues to be the case in Florida where the process is used very often and efforts to license appraisers under SB336 and HD79 were defeated in recent legislative sessions. After Hurricane Katrina the State of Louisiana began issuing licensing appraisers and conducts a background check and qualifications audit.
The Windstorm Insurance Network is a resource to find trained and certified appraisers also. Wind is the largest group of its type and has taken the lead on training of insurance appraisers and umpires. Their contact information can be found here and they can give you a list of appraisers:
Ask for references from other professionals, insurance agents, Google and you’re likely to hear the same names over and over again. Typically appraisers are paid by the hour but some policies in Florida do allow a percentage agreement. The umpire is paid half by the insured and half by the company. A signed appraisal award followed by payment of the award is expected to close the claim.
The Mediation Process and How It Works
Mediation is a less formal way than the courts to resolve claims between policyholders and an insurance company. A completely neutral and unbiased third party Department of Financial Services attorney assists in resolution of the dispute but does not dictate the outcome. During this mediation process, both parties collaborate to come to an agreement on the challenges associated with the loss. Usually this takes place in a mediation conference type facility that lends it-self to the process.
In the State of Florida, the office of Jimmy Patronis (Florida’s Chief Financial Officer) manages these programs. Their website is an excellent resource for more information on Mediation and Neutral Evaluation. They have a specific section on residential property mediation here:
Other downloadable resources on the Division of Consumer Services page include:
- Residential Property Mediation Program
- Form to Request Personal Residential Insurance Mediation, DFS-I0-2082
- Insurance Mediation Disposition Form, DFS-I4-2169
- Initiate Mediation Request Online
Having worked as insurance appraiser for most of my 20 years in the business I have seen many ways to ruin an appraisal and even seen them sabotaged by the appraisers or parties for either side. These are the assignments to not take. When the parties and their lawyers or public adjusters are working as advocates in relation to their clients that is their role but not necessarily the role of an appraiser. Knowing and working to this distinction is the art of job.
Licensing is required in some states including Louisiana. The La. Dept of Insurance has created a licensed insurance appraiser designation that requires submission of qualifications and a background check.
Please see my license as an example of same: John Minor’s Louisiana Department of Insurance Registered Appraisers Designation.
Hiring an experienced appraiser can keep the process moving along smoothly so you can get back to your life as quickly as possible or you can get a claim that was not getting done completed. The process begins when you first hire an appraiser, which is best done as soon as possible after the parties have reached an impasse. At this point, you must submit a letter to the opposing party to notify them of your intent to appraise the property damage so that they, too, can hire an appraiser. Both appraisers will appraise the loss. In some occasions this work is done jointly and in other occasions it is not. During this assessment and research phase, the appraisers will puts their years of experience into providing an extremely accurate report. These appraisals may have expert reports within them in regards to weather, engineering, air quality, business interruption, or any other segment of the claim. We feel our group excels in this portion of the job out of a willingness to work our files. We have experience in the realities of the time and cost of materials needed to correct the damage, and applicable building codes and regulations that govern same. All of this information will be factored into the replacement cost value detailed in the final report.Having an accurate, comprehensive appraisal report is your best asset when coming to a fair number for the value on a disputed loss.
If you are in need of appraisal services, call John Minor @ Complete today to ensure you get a fair, honest appraiser that will provide you a honest days work and come back with a good number.
Complete, Inc. offers insurance claims appraisal service Nationwide, with a focus on Gulf Coast States of Florida, Texas, Louisiana, Mississippi and Alabama.