Insurance Appraisal Clause

Unfortunately, when you are facing a loss in your property, disputes can arise over the amount of loss or the scope of damage when you file a claim. If your insurance company is threatening to leave a portion of the claim uncovered, it may feel as though the weight of the world is on your shoulders. However, many property owners are unaware that they can settle a claim by invoking an appraisal clause. Operation Restoration wants to help minimize your out-of-pocket expenses by explaining how your appraisal clause can be put to work for you. 

What is an Insurance Appraisal Clause?

When you hear “appraisal,” it likely brings up the idea of getting an assessment on the value of your property. However, the appraisal clause of your insurance policy is the nonjudicial method for resolving a dispute between you and your insurance company over how much they should pay to settle your claim.  

When Should I Invoke an Appraisal Clause? 

Let’s set the groundwork for when you may find yourself in need of the appraisal clause. Your home has experienced a major fire. You have taken all the proper steps by calling the fire department, notifying your insurance company, and securing the help of a trusted fire restoration services company. 

Operation Restoration performs an inspection of your fire damaged home with a detailed scope of work and estimate for the damages. Your insurance adjuster comes back with the news that they will not cover some of the expenses due to a disagreement in the amount of loss. The insurance company is refusing to negotiate.  

How frustrating! It may appear as if you have run out of option, but in reality, this is the time to invoke your appraisal clause. 

The Appraisal Process 

You can find the process for invoking the appraisal clause in the conditions section of your homeowners insurance policy. Either the insurance company or the policyholder can invoke the clause, generally in writing. Typically, you will find an outline of the steps required. 

These often include a time frame within which both you and your insurance adjuster would find an impartial appraiser. The appraisers will then, in turn, find an agreed upon, neutral third party, or umpire, within a specified timeframe. Each appraiser will assess the amount of loss, submitting a report to the insurance company. If the appraisers fail to agree, the umpire will make the final decision on which any two agree upon. 

You should know that both you and your insurance company will be required to pay your respective appraiser while splitting the cost of the appraisal and umpire evenly. When the conditions are right and both parties have made an honest attempt at agreement, invoking an appraisal is often a quicker, less costly way to settle a claim dispute without extensive litigation. 

How to Choose an Appraiser for Your Claim 

The best appraisers are the ones with the most knowledge and experience in the process. You’ll want to select an appraiser who is familiar with who to choose as an umpire and how to agree upon one with your insurance company. 

Strong negotiation skills are a plus for your appraiser. Having someone on your team with the ability to come to an agreement with the other appraiser and umpire can ensure your claim is handled swiftly. Without a competent appraiser, your insurance company will have the advantage, and you could be out time and money. 

Should I Invoke an Insurance Appraisal? 

As with everything, there is a time and a place for insurance appraisal. Here are our recommendations for when not to use this clause: 

Do Not Invoke an Insurance Appraisal If:

-The dispute is over policy cover, provisions, deductibles, or a previously paid amount on the claim. 

-There is not a substantial difference in the amount dispute to necessitate an appraisal.  

The Challenges of the Insurance Appraisal Clause 

While invoking an appraisal clause can help settle a stalemate, it does come with its challenges. Here are a few that you should keep in mind: 

  • There are no guarantees. If you disagree with the results of the appraisal, there are limited options for contesting the amount or pursuing litigation. 
  • It will take time. This is not an overnight process, as each party will have work to do within your policy’s specified timeframes. 
  • You are at a disadvantage. Insurance companies work with appraisers every day, meaning that they have established relationships. It can be difficult to find appraisers who will work for the insured. You may also have a trying time finding an impartial umpire approved by the other appraiser. 

To Invoke, Or Not to Invoke? 

Making use of your policy’s appraisal clause can be a timely and effective option for resolving a claim dispute. When properly executed, you can seek fair and adequate coverage without the hassle of legal intervention. Read your policy to learn more about the appraisal clause.