Appraisal versus Mediation

Appraisal vs Mediation in Property Damage Insurance Disputes.

Appraisal vs mediation. Which do you choose? If you are in the middle of an insurance claim on your house and you cannot seem to get your claim settled, you might want to consider either appraisal or mediation rather than to seek a lawyer. We will break it down in simple terms and you should have a good grasp of it after reading this article. It’s important to know that the processes may be different depending on the state you live in or your particular insurance policy, so please refer to your own state for differences in the rules. Some policies do not have an appraisal clause but they have a clause for mediation.  Moreover, some policies have the option for both mediation and appraisal, so please refer to your insurance policy. For the purpose of this article, we are referring to appraisal vs mediation in the State of Florida. 

The first thing to know is that appraisal is for disputes in the AMOUNT of the loss.  In other words, the claim was NOT denied.  An appraisal is used when you and your insurance company cannot agree on the value of the damage. Mediation is different.  Mediation can also be used for determining the value of the loss based on scope, but you can also use mediation if you get a denial of your claim.  Both processes help keep these claims out of the courts.  They are an alternative to using the court process. One of the major differences between appraisal vs mediation is that the results of the appraisal are generally binding, but the results of mediation are not. 

What is the appraisal panel?

The members of the appraisal are the two appraisers and the umpire.  They are known as the appraisal panel or appraisal committee. The panel consists of these three people.   You, the insured, will choose or appoint an appraiser, and the insurance company will also appoint one. These two appraisers will then choose a third person who will be the umpire.

The appraisers will meet at your property and review your claim. For the appraisal, once the appraisers and/or umpire agree on the value of the damages, just two out of the three members of the panel have to sign off on the appraisal letter and the amount of the loss is then set and the insurance company will process the claim.   The claim is now complete.   For better or worse, you will likely have to accept the outcome unless it can be proven that there were rules broken, and then it would have to be challenged in court.

Mediation is different.  If at the end of mediation you and the insurance company have agreed upon a settlement, you (or the insurance company) will still have a small amount of time to change your minds.    If either side decides to change their mind after an agreed-upon mediation result, the claim result will go back to being undecided.  You may be able to now try appraisal as long as your policy has an appraisal clause in the policy language.  

How the appraisal process works…in Simple Terms.

If you decide to try the appraisal process and your policy allows the appraisal, both parties (the insurance company and the insured) will provide an impartial person who will become the appraisers for the claim in dispute.  These two people will choose an umpire in case they can’t agree.  Generally, these people must be licensed insurance adjusters.  The two appraisers will meet at the property and go through the damages.  Don’t expect a head-to-head war at your property and don’t expect fists to fly.  This is a very professional meeting.  Most of the discussion and negotiation between the two appraisers happens by phone and email in the days to follow. 

Be aware that the appraisal process can either go in your favor or not in your favor.  Only the appraisers and the umpire (if necessary) are involved in the discussion.  If you become involved, then it is against the rules and the insurance company can technically challenge the validity of the appraisal.  Remember, the appraisers and the umpire must be impartial for it to be a legit appraisal.

What is the Job of the Appraiser?

The appraiser’s job is to find common ground on the items in terms of the cost. If the two appraisers can come to an agreement on the value of the damages, then a piece of paper is signed and that amount is set and will become binding.  There would be no need to bring in the umpire.  The appraisal settlement amount is then sent back to the insurance company where it will be processed for payment

Who can be Your Appraiser?

The insured usually has to find their own appraiser who will get paid a percentage of the settlement.  At Florida Allstar Public Adjusting, if we are representing you on your claim as your public adjuster, we can ‘usually’ handle the appraisal for you at no extra cost.  However, if the insurance company does not agree with us as your appraiser, you will have to appoint a different person as your neutral impartial appraiser.  If you are forced to appoint another appraiser, you will pay fees on top of any other fees that you may have including public adjuster fees.

An Umpire?  What’s That?

A stated, once the appraisers are appointed, it is their job to choose a third (impartial) person who acts as an umpire in the event that the appraisers cannot work it out.  If the two appraisers cannot agree upon the choice of which umpire to use, then the courts will choose the umpire.   Once two of the three appointed people in the appraisal panel (the two appraisers and the umpire) have agreed on the value of the claim, the value is set and the claim is done.  If the umpire does have to get involved, the cost of the umpire will be split between the insured and the insurance company.

And now for Mediation. How the Mediation Process Works… in simple terms.

The mediation process is different:  The mediation must be demanded through the Department of Financial Services and the Mediation Department.  The DFS will assign a mediator and attempt to schedule the mediation so that all parties can attend.  The insured, the mediator, the insurance company representative, the public adjuster or lawyer will be required to attend.  Most of the mediations these days are being conducted online via Zoom.

What to Expect at Mediation.

When the mediation begins, all parties will be connected to Zoom and the mediator will go over the rules and how it will proceed.  The mediator does not get involved in the negotiations.  He is just there to help the process along and to prevent a stalemate.  He will facilitate the mediation.  At any time you can separate into a private room so that you and your representative can talk privately.  Or if you want to speak only to the mediator you can do that as well. Or if you want to speak to the mediator and your representative in a private room you can do that also.  Just ask.

Your public adjuster or attorney should be prepared with photos, estimates, engineer reports, etc., and your representative should summarize the claim and make an argument why the claim should not be denied, or why you are entitled to your scope of damages and the estimated amount of the loss.

If the insurance company wants to settle the claim, they will open with an offer.  Remember, coming to an agreement at the mediation means that it may be one less claim going through the courts, and the insurance company would rather settle at mediation because litigation is expensive for them.  So, expect an offer to resolve a denied claim.  If you are fighting over the scope of the damages, be prepared to present photos and evidence.  From this point, the mediator helps to keep the dialog and movement going during the negotiations.  The mediator is neutral and won’t sway you or the insurance company.  Be prepared for a long Zoom conference if you are having problems seeing eye to eye with the insurance company.

Do you Agree With the Results of Your Mediation?

If at a point you agree with the offer at the mediation, you will be asked to respond in writing (by email) stating that you accept the offer.  The insurance company will then prepare a release for you to sign and return back to them.  Unless stated differently, the insurance company will have to disburse the full settlement amount within 10 days of the conclusion of the conference.

Mediation is non-binding and you or the insurance company can change your minds. That is, neither the policyholder nor the insurance company is legally obligated to accept the outcome of the mediation conference. Settlements reached at the mediation can be rescinded within three days of the agreement as long as the check has not been cashed.

Is Appraisal or Mediation a Better Option for you?

We feel that each claim and circumstance is unique. When trying to decide between appraisal vs mediation, you should know the difference.  Why not call us to discuss?  We would be happy to help guide you.  Call us today at 954-659-8333.

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