Appraisal
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Understanding The Appraisal Process
When policyholders and insurance companies disagree over the cost of repairing or replacing damaged property, it can be a frustrating experience, particularly for the policyholder, who may feel pressured to accept the insurer’s settlement offer. Often, policyholders are unaware of their rights to challenge the insurer’s decision or the available avenues for resolving such disputes. Insurance companies may not always inform policyholders of their options, leaving many unaware that they can dispute a settlement or how to properly initiate a property insurance claim dispute.
One effective method for policyholders to contest their insurance company’s offer is by invoking the appraisal clause in their insurance policy. When executed correctly, the appraisal process can serve as a valuable alternative dispute resolution tool. However, it’s important to note that not all insurance policies include an appraisal clause.
A typical appraisal clause might include language similar to the following, which provides a general explanation of how the process works:
APPRAISAL – If you and we fail to agree on the amount of the loss, either party may request that the amount be determined through Appraisal. Upon receiving a written demand for Appraisal, each party must select a competent, independent appraiser and notify the other party of their choice within 20 days. The two appraisers will then select a competent, impartial Umpire. If the appraisers cannot agree on an Umpire within 15 days, either party may petition a judge in a court of record in the state where the property is located to appoint one. The appraisers will then determine the amount of the loss. If they cannot reach an agreement within a reasonable time, they will submit their differences to the Umpire. A written agreement signed by any two of the three (the two appraisers and the Umpire) will establish the amount of the loss.
For a more detailed explanation of the property insurance appraisal process, you can refer to our article: How a Public Adjuster Can Help You Settle Your Home Damage Claim Through Appraisal.
If you find yourself in a disagreement with your insurance company over the cost of repairs or replacement of your damaged property, consider reaching out to a property insurance appraisal professional at Tutwiler & Associates. Our team includes WIND Certified Appraisers such as Rick Tutwiler, Scott Luginski, and Michael Platts, as well as WIND Certified Umpires like Rick Tutwiler, Keith Grams, and Michael Platts. Additionally, Rick Tutwiler is a Certified Property Insurance Appraiser through the International Appraisal and Umpire Association. We can help you determine whether your policy includes an appraisal clause and whether invoking this provision is the right course of action for your situation. You can find us listed in the Directory of WIND Certified Appraisers. To explore your options, call us at 813-287-8090 or contact us directly.
Understanding your rights and options is crucial when dealing with property insurance disputes. Let us help you navigate the process and ensure you receive a fair settlement.
Understanding Mediation
In addition to appraisal clauses, many insurance policies now include mediation provisions. Unlike appraisal, mediation is non-binding and generally less expensive for the policyholder. The primary cost to the policyholder typically involves the mediator’s fees for organizing, preparing, and conducting the mediation session.
Some states, like Florida, have established specific statutes outlining the mediation process. For example, Florida Statute 627.7015, titled Alternative Procedure for the Resolution of Disputed Property Insurance Claims, provides a framework for how mediation should be conducted in property insurance disputes.
As with any formal process, there are procedural steps to prepare for. While not all mediations result in a settlement, they offer the valuable benefit of understanding the insurer’s position in detail. This insight can be instrumental in preparing for the next steps, such as the appraisal process, if mediation does not resolve the dispute.
If you have questions about mediation or want to explore your options, feel free to call us at 813-412-8357 or contact us directly. We’re happy to explain the mediation process or refer you to qualified legal counsel for any specific legal concerns you may have.
FAQs About Appraisal
Please explain the property insurance appraisal process?
Is Appraisal right for me?
What is the process after a homeowner contact’s you about a claim?
What should people know about the appraisal option in their policy? Do most policyholders have that?
Invoking the appraisal clause can be a powerful tool for policyholders to challenge their insurance company’s settlement offer. When handled correctly, appraisal serves as an effective alternative dispute resolution method, often alleviating the frustrations of a prolonged claims process. However, many policyholders are unaware that the appraisal provision exists, let alone the intricacies and procedures involved. It’s important to note that appraisal is not intended to address coverage disputes but rather to resolve disagreements over the scope of necessary repairs and the cost of those repairs.
For example, many insurance adjusters use estimating software like Xactimate, which claims to reflect current market prices. However, we often find discrepancies between the software’s estimates and the actual costs charged by local contractors. Additionally, adjusters may select “average-grade” materials in their estimates, even when the property features custom or premium-grade materials. These subtle choices can result in significant undervaluations, even on smaller claims. Depreciation is another factor that can drastically impact the settlement. For instance, some insurers apply 50-70% depreciation based solely on the property’s age, without considering its maintenance and condition, which might warrant a lower depreciation rate of 10-15%. These nuances can add up, leaving policyholders feeling pressured to accept inadequate settlement offers. However, it’s important to remember that everything is negotiable, subject to the policy’s limits and provisions.
What are some of the thresholds in terms of monetary gap that might warrant invoking the appraisal option?
There are costs associated with the appraisal process, and insurers sometimes use this to their advantage by invoking appraisal themselves. Typically, the policyholder must name their appraiser within 20 days of receiving a written demand (by which time the insurer has likely already chosen theirs). The two appraisers then select a neutral umpire, which can be time-consuming due to the limited pool of qualified professionals in this niche field. Some appraisers and umpires may decline to work with certain parties for various reasons. The policyholder is responsible for covering their appraiser’s fees and half of the umpire’s costs if the appraisers cannot reach an agreement. Given these expenses, appraisal is most beneficial when there are significant disagreements over both the scope and cost of repairs. It’s also worth noting that the appraisal award could potentially be lower than the insurer’s original offer, though this is rare and typically occurs only in smaller claims (under $50,000).
If you have questions about the appraisal process or need assistance determining whether it’s the right option for your claim, contact Tutwiler & Associates. We’re here to help you navigate the complexities of your insurance claim and ensure you receive a fair settlement.