Resolving Insurance Claims through Appraisal

If your insurance claim is at a stalemate, the appraisal process might be right for you.

You’ve already completed most of the important steps for your insurance claim. Maybe your pipes have leaked and caused damage, or you’ve had a roof leak. The insurance company has inspected, accepted coverage and issued an initial payment. 

You, or your public adjuster have let the insurance company know that the payment was insufficient to fully repair your damages. Maybe you’ve even received a supplemental payment, but at this point, your insurance company doesn’t want to pay you anything else. 

How can you resolve your claim?

What is “Appraisal” when it comes to insurance?

Many people have heard the term appraisal when it comes to buying a house and getting a mortgage. If you’re purchasing a property, an inspector may be required to determine a fair market value of the property to make sure you have enough equity to qualify for the loan. 

When it comes to an insurance claim, appraisal means something else, entirely. Appraisal is a remedy contained in some (but not all!) insurance policies to resolve insurance disputes. It is a conditional provision, in this case meaning it is an optional method of alternative (to a lawsuit) dispute resolution, but if either party demands it, it becomes mandatory.

Appraisal is a bit like arbitration. The result is binding, and absent exception circumstances, is incredibly difficult to overturn. That’s why it’s best to let a professional public adjuster like VIP Adjusting assist you in evaluating your claim and letting you know your options.

Once appraisal is invoked, the insured and insurance company each select an appraiser in accordance with the terms of the insurance policy (this language actually varies from company to company and can restrict who may be chosen for a number of reasons). Once the appraisers are chosen, they select a third party neutral umpire in case the appraisers can’t resolve the claim between themselves. The two appraisers and the umpire are what’s known as the appraisal “panel.”

Agreement by any two of the three members of the appraisal panel set the value, and may also decide and determine the cause of loss for purposes of insurance coverage.

These are a lot of factors. Again, this is all the more reason not to go it alone and make sure you have a public adjuster with experience advising you throughout.

When is appraisal the proper remedy for you?

First of all, in order for this remedy to be the right remedy for you, your policy must contain an appraisal provision. Some insurance companies have appraisal and others don’t. A public adjuster can review your policy with you (or for you), because they can be difficult to read and the provision may be in more than one location.

Next is the most important part of whether to proceed to appraisal; the valuation. What is the dispute? Which rooms? Which damages? What value? What is actually going to be required to do the repairs? Are there significant questions about the proper manner and method of repair to your damage? These are all things to discuss with your public adjuster. 

Only you can make this decision with the help of your public adjuster, and the decision should only be an informed one, because it is binding and very difficult to challenge if the payment is insufficient. 

Another consideration to make is if your insurance company uses a relatively small group of appraisers that are known to your adjuster. This may make it easier to place a probability on the outcome. The most important part of this decision is that you be made whole. Does your public adjuster have the connections in the industry to be able to evaluate this choice properly?

When is appraisal possibly the wrong decision?

If you know, for one reason or another, that you absolutely need “at least $X” to get the repairs completed to make you whole after a loss, and if you come in anywhere under that, appraisal likely is not the appropriate remedy for you. Appraisal is binding. You may not be able to afford to leave the final result up to an appraisal panel.

You also don’t get to have any input into the outcome of the appraisal. Prior to appraisal, you can evaluate the merits of a stalemate by discussing with your public adjuster. You can have your public adjuster try to negotiate a settlement on your behalf and you can decide to take or leave any offer from your insurance company. You can file a lawsuit and, short of trial, can accept or reject any offer made.

In appraisal, however, the panel is supposed to be free from influence from the insured and insurer. This doesn’t always happen, but there’s case law and codes of ethics that govern this process, much like an arbitration. An entire book has been written on the topic, The Law and Procedure of Insurance Appraisal that VIP Adjusting’s public adjusters have read cover to cover and fought for both during appraisal, and in courts around the state of Florida. 

Another time appraisal may not be the right choice is if you know the insurance companies appraisers are particularly difficult and will also make selecting an umpire problematic. This is yet another discussion you can and should have with your public adjuster. 

Your claim is too important to make uninformed decisions

Your insurance company is supposed to make you whole after you’ve suffered damage. With appraisal being binding, it may be the most risky decision you make during the entire process. If you can’t afford the risk of falling short on your claim, appraisal might not be right for you. Making an informed decision with your public adjuster is the best way to protect your assets. 

All of VIP Adjusting’s public adjusters have been certified appraisers at various points by The Windstorm Insurance Network .

Justin Petrie, Esq. is a Florida attorney for over ten years, and licensed public adjuster. In that time he has handled thousands of insurance claims through the insurance claim process, In appraisal, in litigation, at mediation, to trial, and on appeal.

You might also be interested in:

Why you should hire a public adjuster

If your insurance claim isn’t paid, but you don’t want to file a lawsuit