The Appraisal Clause

If 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.  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.

How the appraisal process works…in Simple Terms.

Once the Appraisal is invoked, both parties (the insurance company and the insured) will provide a person who acts like the appraiser. Generally, this person is a licensed insurance adjuster.   These two people will then choose a person known as an umpire just in case the two appraisers cannot come to an agreement on the amount of damages.  If the two appraserss cannot agree upon the choice of which umpire to use, then the courts 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, and the homeowner is okay with the amount agreed and 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.

If the two appraisers cannot come to an agreement, then the umpire who is supposed to be a third (impartial) person, will make the final decision on the settlement.  

The umpire will make the final decision which is also a binding settlement.  This means, unless there was some mistake in the way the appraisal was handled in terms of legality, you usually 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.

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

Usually, my advice for an appraisal is based on the amount in disagreement.   In other words, it has to make sense because the costs to use 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 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.

I am happy to go over your claim with you for free and answer any questions you may have.  Call us today at 954-659-8333.  I am happy to assist.

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