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How Insurance Appraisal Clause Works

Posted by Joe Brennan | Posted in Appraisal Umpire, Fire Insurance Claims, Homeowners Insurance, Independent Appraiser, Insurance Claims Help, Insurance Dispute | Posted on 03-16-2010


In the event of an insurance claims dispute, the Insurance Appraisal Clause within an insurance policy allows the two parties to settle the dispute using independent appraisers. The policyholder contracts an insurance appraiser, who is independent, to assess the value to the damages to their property. The insurance company hires a separate appraiser as well. The two appraisers together will select an appraisal umpire. The umpire is sort of like an arbitrator or judge. If the two appraisers cannot agree on a certain damages, the umpire makes a verdict. As long as one of the appraisers agrees with the umpire, that disagreement is settled. The umpire may agree with one independent appraiser about one point and agree with the other appraiser on another point. Eventually all points and disagreements are settled.

These three individuals; the appraiser for the insurance company, the appraiser for the policyholder, and the umpire are collectively called The Insurance Appraisal Panel. Their goal is to determine a fair and reasonable amount of loss. This amount is determined by the amount of money it would take to repair or replace the property back to it’s original condition prior to the loss.

After the appraisal panel has been chosen, the two independent appraisers will scrutinize the estimates and documents, and the differences between the two separate figures. For example, one independent appraiser may decide the siding on a home does not need replacement, and the other independent appraiser feels that it should be replaced. The two appraisers will both argue their position and try to reach a compromise. First, they work together to decide the need for repair to the siding or replacement, and then the cost it would take to restore it to it’s original condition.

The benefit to both parties of this Inurance Appraisal Clause is that they work separately from the insurance company and policyholder, and any emotions associated with either. There is a hope that disinterested parties will have a clean slate with no prior animosity. The only information the panel has is the amount of the damage and the differences in estimates. They do not have anger, emotion, or attachment relating to the dispute. This particular clause was designed so these disinterested parties could make a decision based solely on the facts.

Occasionally, there is a problem in which the indpendent appraisers cannot agree on all items. This is where the umpire comes in. The three will discuss the issue and try to reach a common settlement. The final amount decided on is called the Amount of Loss. The final amount of loss that is agreed upon is known as the Appraisal Award. This award is signed by the appraisal panel. All three can sign. However, to have a binding appraisal award, at least two of the three members of the appraisal panel must sign. This could be the umpire and one of the independent appraisers or the two appraisers and not the umpire. When any two agree and sign the award, the appraisal process is over. The award amount is then paid to the policyholder from the insurance company.

Look into the Insurance Appraisal Clause in your policy. An independent appraiser may be your only hope of obtaining a fair settlement from your insurance claim dispute.

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(C) Joe Brennan is President and owner/operator of Insurance Claims Group, Inc., a national independent adjusting, appraisal, and umpiring firm. We will answer your claim questions FREE as part of our FREE Insurance Advice and Insurance Claim Consulting Services.

Insurance Claims Group, Inc.
Joe Brennan
Ph: 919-669-9111
Fx: 919-573-9595

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