Many homeowners and business owners find themselves disagreeing with their insurance company's analysis of these insurance claim. However, the majority are unaware that they can dispute the insurance company's findings via the Insurance Appraisal Clause! Find out the steps you are able to take to dispute your insurance claim settlement.
Many homeowners and business owners find themselves disagreeing with their insurance company's analysis of these insurance claim. However, the majority are unaware that they can dispute the insurance company's findings via the Insurance Appraisal Clause! Even though the policyholder (you) submits a contractor's estimate, receipts for repairs or materials, as well as photos showing damages that the insurance company didn't include for repairs... they still won't budge.
Most policyholders are unacquainted with how to dispute and resolve their claim with the insurance company. Policyholders have an option and a speech inside their policy because of this very purpose. It's called The Appraisal Clause - also know as The Appraisal Provision. Now, don't let this scare you. It might seem like a fancy clause that would have a law degree to understand. However, an easy way to understand the clause is that it's the insurance industry's version of arbitration. Although similar, the Appraisal Clause is NOT an arbitration or mediation and the umpire is not an arbitrator, mediator, or judge. Insurance Appraisal, Mediation, and Arbitration are separate things.
In a nutshell; Arbitration requires attorneys and a legal process, where Insurance Appraisal does not require attorneys or a legal process. Arbitration is really a dispute between two parties for just about any reason, where as, the Insurance Appraisal Clause is really a for disputes between the "value," of property only - bee it an automobile, plane, train, couch, house, commercial building, etc.
Most Policies Have the Appraisal Clause.
Should you feel you're at a dead end together with your insurance company and desire to resolve your claim you'll need to test your policy for the Appraisal Clause. Most policies may have the provision listed beneath the "What to do following a loss," section or the "Conditions" part of the policy. Below, you will find an example of an average Insurance Appraisal Clause contained in most policies. Keep in mind that policies can vary in each state. Therefore, you should read your personal policy to see if this clause exists. It'll say something such as these ;
"APPRAISAL - In the event that you and we neglect to agree with the quantity of loss, just one can demand that the quantity of the loss be set by appraisal. If either makes a written demand for appraisal, each shall select a qualified, independent appraiser. Each shall notify the other of the appraiser's identity within 20 days of receipt of the written demand. The 2 appraisers shall then select a qualified, impartial umpire. If the two appraisers cannot agree upon an umpire within 15 days, you or we can ask a judge of a court of record in their state where in actuality the residence premises is situated to select an umpire. The appraisers shall then set the quantity of the loss. If the appraisers neglect to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any two of those three shall set the quantity of the loss."
OK, But How Does The Insurance Appraisal Clause Work?
The Appraisal Clause allows the policyholder (you) to hire an independent appraiser to determine the worthiness of these damages. Subsequently, the insurance company will even hire their particular independent appraiser. The 2 appraisers will then get together and select an umpire. The umpire is basically the arbitrator, or everything you might call the judge. If a disagreement between the two appraisers arises, they could present their differences to the umpire who will make a ruling.
OK; so far so good, the basic principles of the insurance appraisal process are beginning ahead together. We have an independent appraiser for the policyholder. We have an independent appraiser for the insurance company. Finally, there is an Umpire. These three individuals are called The Appraisal Panel. The item of the Appraisal Panel is to create or determine The Level of Loss. The Level of Loss is the sum total dollar amount needed to return the damaged property back again to its original condition, either by repair or replacement.
After the Appraisal Panel is defined, the policyholder's chosen appraiser and the insurance company's chosen appraiser will review the documents, estimates, and differences between them. The 2 independent appraisers will endeavour to talk about and resolve the differences in damage and in cost. For example; the insurance company may determine that brick on a house does not need to be replaced. Where as, the contractor or appraiser for the policyholder says that it does need to be replaced. The 2 appraisers will discuss their reasons because of their position and try to come calmly to an agreement, first if it should be repaired or replaced, and secondly the fee to return the brick back again to it's original condition before the loss.
One advantage of this technique is that the two independent appraisers have not been subject to the bickering and anger between the policyholder and the insurance company. Basically, it's the hope that cooler heads will prevail. All the appraisers genuinely have is the quantity of the damage and the difference between the two estimate numbers. They do not have the last baggage or anger that led around the Appraisal. The method was designed so that both of these individuals, who have no fascination with the outcome, could discuss a settlement based on the facts presented to them.
Sometimes issues arrive where the two independent appraisers can't agree with certain items. In this event, the two appraisers will submit their differences to the chosen umpire. The three will discuss the problems and try to attain an agreed settlement of the differences. As stated above; the settlement or final number is named The Level of Loss. The last amount is known as the Appraisal Award. The Award is signed by the people who agree with The Level of Loss. However, only TWO of the three individuals need certainly to agree. (An agreement between the two independent appraisers, or the umpire and either appraiser) Once any TWO of the three individuals on the Appraisal Panel sign the award... the dispute has ended! The total amount on the Award binding and is paid by the insurance company, to the policyholder.
Can I Use An Insurance Attorney To Dispute My Claim?
The Appraisal Clause was initiated to lower the amount of lawsuits filed against insurance companies. The courts found that many lawsuits were entering the legal system where the fee to correct or replace damaged property had been disputed. Oftentimes the suites were being resolved when professional engineers and contractors could address the issues. The Appraisal Clause was created to get such individuals together and keep these disputes out from the courtroom. Assuming you acquired an estimate of repair to your property for $100,000, from a contractor or insurance claims expert. Your insurance company has generated an estimate for $30,000. This will be a clear dispute between the levels of damage. This type of dispute is precisely what the Appraisal Clause was developed to resolve.
The clause allows parties on both parties of the insurance plan to dispute their differences by using this less costly provision. Let's face it; the courts are filled with lawsuits. The Insurance Appraisal Clause and process allows for the dispute to be settled out of court. Using Insurance Attorneys and lawsuits might have insurance claims tied up in court for years. The Appraisal Provision was designed to keep these disputes out of court for a less costly and timelier resolution.
Insurance Claim Attorneys will usually represent policyholders for bad faith practices. Bad Faith is really a whole other issue and sometimes happens after the Appraisal Process has been completed. Bad Faith claims are for much bigger suites against insurance companies when it's alleged that they didn't act in good faith of the policy they sold to the policyholder. To sum up; disputes between the quantity of damages and repairs will follow the Appraisal Clause before entering in to the legal system. Many Insurance Attorneys will even advise the policyholder to participate in the Appraisal Process before any lawsuits will begin.
How Do I understand if the Insurance Appraisal Clause is really a Good Option for My Claim?
If the Appraisal Clause is in your policy then it is obviously an option. However, it's wise to indicate that Appraisal is generally an alternative if you find a considerable difference in the quantity between the two estimate totals. For example; let's say a fire completely destroys a residence and the homeowner's personal property within it (Know as the Contents). The differences between what the insurance company wants to pay and everything you wish for is $5,000. In this situation, the Appraisal Clause isn't the very best idea. After paying the fees involved for the appraisal, you may not end up with a lot of the $5,000 being disputed.
Also, the Appraisal Clause is only applicable in case a dispute arises from a covered loss. If the insurance company denied the claim as something not covered then this is simply not a dispute on the quantity to correct, but instead a dispute on coverage. For example; homeowners and business policies due not cover damages from flooding. Flood policies are purchased separately. So, if there is no coverage for the flood damage then your Appraisal Clause is not an option.
Simply put, the Insurance Appraisal Clause is to determine the "level of loss," to property only. The Appraisal Panel isn't to determine coverage, policy provisions, deductibles, just how much once was paid on the claim, etc. Let's say there is an appraisal for a great piano that fell off a delivery truck on the highway. The Appraisal Panel's job isn't to determine who's to blame, the policy coverage limit, if the truck had a registration, or anything other than "How Much may be the Piano Worth."
As with our example earlier, if the insurance company offers a settlement of $10,000 to correct a roof and the policyholder has contractor bids for $15,000, then your Appraisal Clause may possibly not be the very best option. The method may cost more than the $5,000 that's being disputed. Unfortunately, the differences in repair/replacement costs are usually much greater. When an insurance company generates an estimate for a claim of $75,000 and the policyholder has acquired professional bids from several contractors of $200,000 or maybe more, its time to invoke the appraisal clause.
Beginning The Appraisal Process.
Either party connected with the policy can invoke the Appraisal Clause. However, this type of request should be produced in writing. Each policy may have an occasion limit of when this will take place. Even if a claim has been closed for many years, either party can still dispute the claim and reopen for review. It's recommended that the request to invoke appraisal be sent via certified mail. After the request to invoke the Appraisal Clause has been initiated, as explained earlier, each party, the insurance company and policyholder, appoints an Independent Appraiser. (If you need to invoke the appraisal clause in your policy you'll need to submit a letter to your insurance company. Find extra information at https://bluewell.com.au/insurance/public-liability-insurance/
