What is Appraisal in Property Claims?


This will explain the appraisal process in property claims: When you and your insurance company disagree on the value of your loss, and your insurance policy has an appraisal clause, you have the option to ask for an appraisal if you feel like you are not getting a fair settlement and negotiations with the adjuster have it a brick wall.  Furthermore, the appraisal process is generally not for claim denials, but rather for situations where you don’t agree on the amount of the settlement. Either the insurance company or the insured can demand appraisal. An appraisal is an alternative dispute resolution option.

How Appraisal in Property Claims work…in Simple Terms.

Once the Appraisal is demanded, both parties (the insurance company and the insured) will appoint an impartial person who acts as the appraiser. Generally, this person is a licensed insurance adjuster.   These two people will then choose a person known as an umpire who will be used in the event the two appraisers cannot agree on the value of the damages.  If the two appraisers cannot agree on which umpire to use, then a judge will choose the umpire.

So, now, with the umpire chosen “just in case”, the two appraisers will meet at the property and go through the damages line by line. The idea 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 becomes binding.  The appraisal settlement amount is then sent back to the insurance company where it will be processed for payment.

When does the umpire come in?

If the two appraisers cannot come to an agreement, then the umpire who is also an impartial person will make the final decision on the settlement.  

Once the umpire makes a decision it will take two of these three people to sign the final award letter and the settlement amount will become binding. This means, unless there was some mistake in the way the appraisal was handled in terms of legality, you will have to accept the settlement for whatever it is, good or bad.

This process can either go in your favor or not in your favor.  There are also more costs that must be paid. The insured usually has to find their own appraiser who will get paid a percentage of the settlement.  This is on top of any other fees that the homeowner has agreed to pay, such as public adjuster fees or attorney fees.

Does the appraisal process Cost money?

Furthermore, if the claim goes before an umpire, each party is responsible for splitting the umpire fees.

Usually, our advice for an appraisal is based on the amount in disagreement. In other words, it has to make sense because the costs for the appraisal process generally could run upwards of $2000 just for the cost of the umpire.   Then, the appraiser will take generally 10-20% of the settlement amount ON TOP of any other public adjuster or lawyer fees.  So, if you are fighting over 4 or 5 thousand dollars, it probably does not make good business sense to do an appraisal because of the costs and also the risk of the appraisal not going in your favor.  You could actually end up with a smaller settlement than what the insurance company is offering as a settlement. You can read more about the appraisal process here at the website for the department of financial services. An appraisal is an alternative to litigation and a way to resolve a dispute between you and your insurance company.

We are happy to go over your claim with you for free and answer any questions you may have.  Call or contact the public adjusters at Florida Allstar Public Adjusting today and schedule a time for us to look at your damaged property. Call us at 954-659-8333. We are happy to assist.