What is an Appraisal Clause and When Should it be Used?
Suffering significant damage to a home or business can leave a person understandably anxious and upset. Unfortunately, once you have contacted the insurance company and begun the claims process, the settlement offer often doesn't quite align with what you believe you deserve. We are here to help advise you on property claims in central Florida and can help make the whole process more manageable for you and your family.
This does not mean that you have to accept their offer or even hire an attorney to move forward with the next step in the process. Almost every property insurance policy contains what is known as an appraisal clause. This clause is required by state statute in some places, and some are simply a standard insurance industry practice. While the exact language of a given insurance companies policy regarding appraisal often differs from case to case, most appraisal clauses require each party, the insured and the insurer, to pay an outside appraiser to evaluate the value of the property and the amount of loss.
How to start an appraisal process
In this situation, either party can demand an appraisal in writing when there is a disagreement regarding loss. Both parties will then select their appraiser. Most appraisal clauses require the appraiser to be impartial, competent, and disinterested in the final determination. Once an appraiser is chosen, the parties involved should be sure that appraisers are given clear instructions concerning what is expected of them, precisely what they are supposed to be ruling on. It is common for an appraisal only to involve a portion of a damage claim. For example, an appraiser may be called to rule on the actual cash value of a building, the replacement cost of the contents, or many other things in between. Without appropriate and specific direction, appraisers are likely to extend their ruling into areas that have not been in the dispute or have previously been resolved.
What happens if the two appraisers cannot agree?
It is very common for the appraisers not to agree during the appraisal process, which is why it is stated in the appraisal clause that the two appraisers should convene to select an umpire. A selected umpire must be unbiased, impartial, and disinterested in the situation. If the two parties cannot agree upon an umpire, then either party may petition any Court to appoint one. An umpire in an appraisal is often compared to an arbitrator in an arbitration. Umpires are strictly obligated to be unbiased and disclose any dealings that might create any bias.
Then the appraisers submit their reports to the umpire with any evidence and materials, and the umpire should remain focused on the differences between the parties and rule accordingly. The result is that an agreement by any two of the three involved, the umpire and the two appraisers, constitutes the final ruling.
An appraisal award has been agreed upon. What happens next?
Once an agreement is made, the award is written and signed by at least two of the three participants. It is then shared with the parties, the insurance, and the insured.
Then it is filed with the insurance company. The insurance company should immediately pay upon the award and be careful not to delay beyond the shortest period provided for in the policy by statute or by regulation.
Property claims in Central Florida can be frustrating to deal with on your own. Contact our experts to help you manage the process efficiently and without any added stress.
