Unfortunately, homeowners and business owners will sometimes find themselves disagreeing with their insurance company's analysis of their property damage claim. However, most are unfamiliar with the option available in their policy to invoke The Insurance Appraisal Clause and hire an appraisal appraiser. In some instances your insurance company will disagree with your contractor's estimate. Who's wrong, who's right, who knows?
For claims that reach such an impasse - the only available option to obtain an equitable resolution will be a clause buried in your policy. Located within the "Conditions" and/or "What to do after a loss," sections of your policy is a clause known as Appraisal.
Usually the clause is initiated by the insurance company, rather than the policyholders. Not because policyholders can't invoke the clause, but rather, the insurance company has a better understanding of the terms and conditions of the policies they offer. Now, don't let this scare you. The clause is not that difficult to understand. The simplest way to describe it is that it's the insurance industries version of an arbitration. However, it's not actually an arbitration.
What Is The Difference Between Arbitration and The Insurance Appraisal Clause?
Don't confuse the Appraisal Clause with an Arbitration. It's very similar, in general, because most people have heard of an arbitration before. But let's separate the two for a clear understanding.
Arbitration can be defined as a process to resolve a dispute or difference between two parties. The depute allows for a decision by a person or persons other than a court of jurisdiction. Arbitration can be regarded as a private form of litigation. The procedure for arbitration is also regulated by statute. Arbitration is a legal process resulting in a final and binding decision issued by the arbitrator which can only be challenged under very exceptional circumstances. Arbitration works under a similar legal mechanism as litigation, but with some added advantages over litigation. It is conducted in a private place so that confidentiality can be preserved and takes place out of a courtroom.
The Appraisal Clause does not bind either party to its findings, however, the appraisal award and the amount of loss is binding. The Appraisal Clause is meant to be the method for determining disputed values. If the value of an item or the costs to repair or replace it cannot be agreed upon, then the insurance policy allows an appraisal process to determine the amount of loss - or the value of the loss. Appraisal cannot be used to determine what is covered under the policy. Appraisal is to determine the "amount," of the covered property ONLY! The Appraisal Clause allows for a less costly mechanism to resolve property disputes by allowing the disputes to be settled out of court. By keeping the process out of a legal and binding litigation, the result is a more timely resolution. The Appraisal Process allows for experts in the field for which the damage is associated, to represent either side. So, an antiques expert can be an appraiser for either side to determine the value of great grandma's bedroom set. As you can see, an attorney is not needed and their is no attorney-client privileges, because it's not a litigation procedure.
An Important Note: Your insurance company must take the time and make every effort to settle claims in a timely fashion. After the policyholder informs the carrier that they disagree with their findings on the claim, the carrier cannot immediately demand appraisal to settle the difference. The carrier needs act in good faith and make every effort to work the dispute out. They're required to re-inspect the property, meet with any and all of your contractor's, or even hire an engineer to inspect the damaged property. Policyholders however, don't have to wait until they feel hopelessly deadlocked with the adjuster or insurance company to invoke the Appraisal Process. The policyholder can do it any time.
Appraisal Clause In The Policy!
Below, you will find a sample of a typical Appraisal Clause included in most policies. As stated earlier; The clause is usually found in the "Conditions" and/or "What to do after a loss," sections of the policy. Keep in mind that policies are different in each state. Therefore, you should refer to your own policy to see if this exists.
|APPRAISAL - If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, independent appraiser. Each shall notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, you or we can ask a judge of a court of record in the state where the residence premises is located to select an umpire. The appraisers shall then set the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any two of these three shall set the amount of the loss.
How Does The Appraisal Process Play Out?
The Appraisal Clause allows the policyholder to hire an independent appraiser to determine the value of their damages. In turn, the insurance company will also hire their own appraiser. The two appraisers will then get together and select an umpire. The umpire is basically the arbitrator, or what you might call the judge. If there is a disagreement between the two appraisers, they can present their differences to the umpire for a ruling.
So, we have an appraiser for the policyholder, we have an appraiser for the insurance company, and finally, there is an Umpire. These three individuals are known as The Appraisal Panel. The object of the Appraisal Panel is to set or determine The Amount of Loss. The Amount of Loss is the total dollar amount needed to return the damaged property back to it's original condition, either by repair or replacement.
Once the Appraisal Panel is set, the policyholder's chosen appraiser and the insurance company's chosen appraiser will review the documents, estimates, and differences between them. The two appraisers will try to discuss and resolve the differences in damage and in cost. For example; the insurance company may determine that brick on a home does not need to be replaced. Where as, the contractor or appraiser for the policyholder says that it does have to be replaced. The two appraisers will discuss their reasons for their position and try to come to an agreement. First they will determine if the brick should be repaired or replaced, and secondly the cost to return the brick back to it's original condition prior to the loss.
One benefit of the Insurance Appraisal Clause is that the two 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 can prevail. All the appraisers really have is the amount of the damage and the difference between the two estimate numbers. They do not have the previous baggage or anger that led up to the Appraisal. The clause was designed so that these two individuals, who have no interest in the outcome, could discuss a settlement based on the facts.
Sometimes issues arrive where the two appraisers cannot agree on certain items. In this event, the two appraisers will submit their differences to the appraisal umpire. The three will discuss the issues and try to reach an agreed settlement of the differences. As stated above; the settlement or final number is called The Amount of Loss. The final amount of loss agreed to by two of the three individuals is know as the Award. The Award is signed by these two individuals with the The Amount of Loss they agreed upon.
Let's make this clear again, only TWO of the three individuals need to agree. (The umpire and either appraiser, or the two appraisers themselves.) Once any TWO of the three individuals on the Appraisal Panel sign the award... the dispute is over! The amount on the Award is paid by the insurance company, to the policyholder.
Selecting An Appraisal Appraiser
It's important to understand that a good Appraiser is someone who understands insurance issues and who has firsthand knowledge of construction and replacement costs. A good Appraiser is someone who can secure binding bids from reputable sources to repair and replace the damaged property, knows building codes, and can articulate unforeseen costs of repairs. Usually this entails an enormous amount of research, such as costs to thoroughly repair a structure to its pre-claim condition, costs of replacing the property with items of like kind and quality, cost of safely clearing the land or bulldozing the property (in cases of fire and/or major contamination), cost of repairing and replacing contents with items of like kind and quality, and in some cases, the additional living expenses incurred if the home is uninhabitable.
Now, please do not get confused! An Insurance Dispute Appraiser is not a real estate appraiser. He or she is an Insurance Claims Expert on costs and bids to repair and replace. It’s recommended to appoint an Appraiser who is a specialist when it comes to the Insurance Appraisal Process and also Insurance Claims Handling. People requesting assistance in the past have asked if the following experts with the following backgrounds are good candidates:
- Structural Engineers: This person may be a structural expert and could probably provide a good estimate to replace a building, but what about the contents (furniture, food, etc.) damage? Do they know anything about the insurance policy, the claims process, the software used by insurance companies, the Appraisal Process?
- General Contractor or Construction Superintendent: Again, excellent choice for generating a structural estimate, but will most likely not be familiar with insurance claims... and even more importantly, the Insurance Appraisal Clause and Process.
- Construction Attorney: A Construction Attorney most likely has knowledge of construction contracts and issues that building contractors have. Do they know anything about the insurance policy, the claims process, the software used by insurance companies, the Appraisal Process, the contents damaged? (NOTE: If you retain an attorney as Appraiser, remember, there is NO attorney/client privilege because the attorney is being hired as an Appraiser, not as an attorney.)
- Insurance Claim Attorney / Lawyer: Keep in mind that the process was designed to keep these types of disputes out of court. A policyholder can surely use an attorney as an appraiser; however, the fees can exhaust the reward. Attorney's fees range between 30% and 40% of the amount collected. This can dig deep into the net amount the policyholder receives. An Insurance Attorney will also have expert knowledge of the policy. However, the Appraisal Clause clearly notes that no policy provisions will apply. Has the attorney represented their clients in many appraisals or mostly in court cases? How familiar are they with the Appraisal Clause and Process, building costs, construction practices, or the contents damaged? Does the attorney know anything about the software used by insurance companies? (NOTE: If you retain an attorney as Appraiser, remember, there is NO attorney/client privilege because the attorney is being hired as an Appraiser, not as an attorney.)
- Insurance Appraiser: Doesn't it make sense to hire an individual who is an expert of the process in which you are about to engage? You've heard the expression, "Would you go to your auto mechanic if you needed brain surgery?" It is highly recommended to use a qualified, professional, Insurance Appraiser. This professional will already know the Insurance Appraisal Process. They will also have qualified professionals (engineers, contractors, inspectors, etc.) at their disposal to back up their analysis.
Regardless of background, the person appointed as Appraiser needs to be a skilled communicator and advocate. He or she should not be unreasonable. They should know about the insurance policy, the claims process, the software used by insurance companies, the Appraisal Process, contents damage, structural damages, building costs and processes, as well as materials and building codes. Makes sense, right?
Appraisal Appraisers Is Who We Are!
Insurance Claims Group, Inc. exceeds in their knowledge of the appraisal process and is available to represent the facts of the loss on your behalf. To execute the job as your Insurance Appraiser properly, not only should one be educated in the process, but one should also be qualified to review the differences between the two parties. Our extensive experience with construction,building repairs, building materials, and the insurance appraisal process qualifies us as a choice above all. We have extensive knowledge of Xactimate and MSB IntegriClaim. We are capable of reading and understanding the unit costs these estimating software's provide and work with the Appraisal Panel to determine a realistic amount of loss for the claim.
As Your Appraisal Appraiser We...
The first step to our appraisal process is to obtain as much documentation that is available on the claim. We will collect a copy of the insurance companies estimate, the policyholder's estimate, as well as any other documentation that is available. We will vigorously review and inspect each estimate line-by-line for discrepancies.
The next step will be to inspect the property that has been damaged. A thorough inspection will be conducted, room by room, and piece by piece (or any remaining parts). We will conduct this inspection with the two different estimates that are being disputed. With these estimates in hand during our inspection we can determine if one estimate has missed items to be addressed and/or if the other is excessive.
Our inspection will include 50 to 300 photos (depending on the size of the loss and extent of damage). These photos will prove and support our findings. The photos will be taken in a manner that supports our position of whether items can be saved or will require replacement. The photos will also show cause and affect damages. Yes, the bricks on the exterior of a home or building may not appear damaged. However, if the sheathing/plywood behind the brick is smoked and damp - the bricks will require removal to access other repairs.
Some rooms or even an entire building may be damaged beyond recognition. In these cases we will conduct an interview process with the owners of the property to confirm room layouts, types of wall and floor finishes, electrical items, cabinetry, and more. This type of questions and answer session will paint a clear picture of the TRUE value of the damages. The proper value of the claim depends on it's accuracy.
All the data collected will then be programmed into the Xactimate estimating software. Xactimate configures and displays the data in the exact format that the insurance companies require. Line by line, piece by piece, the exact square feet of drywall, paint, wallpaper, and carpet will be calculated for a real and accurate cost to pay the claim. In fact, Xactimate is used by more than 70% of insurance companies.
Any items that are in question will be reviewed by our group of engineers, building inspectors, or contractors as additional documentation to support the true repairs. Foundations, brick, support beans, electrical may require removal and may not meet current building codes. These professionals can advise on ways to keep these types of materials or why they will require replacement.
After all this has been completed we will meet with the other parties appraiser and discuss each others findings. In some cases an agreement cannot be reached between the two appraisers. In the event this happens, the two appraisers will submit their differences to the Appraisal Umpire. (For more information about the appraisal umpire and what their job is in the process, visit here.)
How To Hire ICG, Inc. As Your Appraisal Appraiser!
Please call (919-669-9111) or Email Us to discuss your needs. If we agree to be your appraiser you must formally advise the other party (insurance company or policyholder) that we will be acting in your behalf. To appoint Joe Brennan as your appraiser we'd like to make this process as easy as possible; below is a copy of a letter with your intent to invoke the appraisal clause in the policy. The letter is for homeowners, contractors, PA's or attorneys; as insurance companies already know how to invoke the clause already.
Open and save or open and copy the following MS Word Document here. This document will advise the insurance company that you wish to execute the appraisal clause in your policy. The letter has been pre-written to name Joe Brennan as your appraiser. Open the document and fill in your personal information. Once the form is complete it should be sent to the insurance company via certified mail!
If you need assistance; another option is to request that we fill in all the appropriate information for you. We will create the letter and email you a copy that you can print and send to the insurance company via certified mail!
Contact Us For Interview!
Is Joe Brennan the right fit for your appraisal needs? How do you know unless you ask? Please feel free to contact me by email to set up a date and time to to discuss your Insurance Appraisal needs. Or, call me directly at (919) 669-9111. I will be happy to assist you in any way I can.
Claim & Appraisal Services!
The Insurance Claims Group, Inc. can answer insurance claim related
questions and provide advice and assistance for insurance
claim damages that are a result of fire, smoke, wind, water,
flood damage, hail, theft, hurricane, and even denied claims. The following
is a list of professional services we provide:
Umpire: In the event that a policyholder or the insurance company invoke the appraisal clause the two independent appraisers must choose an umpire. Most policies require that the two appraisers must select and agree upon an Appraisal Umpire within 15 days of the two appraisers being named. The chosen Appraisal Umpire must be an impartial, unbiased, and disinterested party in the outcome of the appraisal award. Our extensive experience with building repairs and the insurance appraisal process qualifies us as a choice above all to act as an Insurance Appraisal Umpire to resolve insurance claim disputes. [More..]
- Independent Appraiser
for Insurance Appraisal Clause: The Appraisal Clause can be invoked by either the insurance company or policyholder. The Appraisal Process is to resolve disputes only. To resolve such disputes, each party must choose an independent appraiser. An independent appraiser is an individual that is hired to resolve insurance claim disputes. Insurance Claims Group, Inc. exceeds in their knowledge of the appraisal process and is available to represent the facts of the loss on your behalf. [More...]
- Insurance Claim Estimate: We provide inspection and complete insurance claim damage estimates for policyholders of homes and businesses, insurance attorneys, repair contractors, and insurance companies. [More...]
Appraisal & Estimating Assistance: In some cases contractors, attorneys, or appraisers may need assistance in preparing a defense for their claim. They may have questions or need advise on some parts of the estimate or damage. We provide consulting and evaluation assistance for any part of a claim you may require answers for. If we can't answer your questions we can refer you to someone who can. [More...]
Consultation: Many times policyholders and contractors are unsure if damages are covered, if there are coverage limits, or find themselves overwhelmed with the complexity of the insurance claim process. In some cases the insurance companies may use industry terms or insurance lingo that can be confusing. We provide information on the insurance claims process, policy interpretation, estimates and estimating, as well as the insurance appraisal process, and umpire services. Educate yourself and understand how to obtain the correct settlement for your home and business insurance claims. [More...]
- Insurance Replacement Cost Valuation: Is your home properly insured? Do you have enough coverage to replace your home or building after a loss. Finding out that you are under insured after a large fire, flood, or hurricane can be devastating. We will provide an inspection of your home or building, take photographs, and provide a fully detailed replacement cost estimate. You can then make an educated decision on how much coverage you need for your property. Not too little, and not too much. [More...]
provide Insurance Appraisal Services in North Carolina (NC), South Carolina
(SC), Georgia (GA), Florida (FL), Alabama (AL), Mississippi
(MS), Louisiana (LA), Texas (TX), Virginia (VA), Maryland
(MD), Delaware (DE), Washington DC, Pennsylvania (PA), New Jersey (NJ), New York (NY), Connecticut (CT), Rhode Island (RI), Massachusetts (MA),
Ohio (OH), West Virginia (WV), Kentucky (KY), Tennessee (TN), Indiana (IN), Illinois (IL), Michigan (MI), Wisconsin (WI), Minnesota (MN), Iowa (IA), Nebraska (NE), Colorado (CO), Kansas (KS), Missouri (MO), and Oklahoma (OK). So, please feel free to gather
information from our services and articles, or jump right in with any questions you may
have by submitting on our insurance questions and answers page. We are here
to help in any way we can.
Insurance Appraisal Process assistance and help is only a phone call away at (919) 669-9111or feel free to Contact Us by email. We provide Insurance Claim Help at NO COST! Free Review and Consultation of your entire claim will allow you to know exactly where your stand so you can make an informed, educated decision on whether to invoke the Insurance Appraisal Clause on your Claim! Get your questions answered! Contact Us anytime.