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Insurance Appraisal Requires More Than Just A Disagreement

Posted by Joe Brennan | Posted in Appraisal Umpire, Fire Insurance Claims, Homeowners Insurance, Independent Appraiser, Insurance Advice, Insurance Claims Help, Insurance Dispute | Posted on 12-13-2010


insurance-claim-umpireInsurance Appraisal: It seems lately as more and more claims enter into appraisal, the clause is being invoke without merit. To actually qualify an insurance claim for the appraisal process there first must be a dispute over the “amount of loss”. However, only after the parties have exhausted negotiations.

Many claims are entering into appraisal prematurely. For example; let’s say that a policyholder has suffered a fire damage claim. The insurance adjuster generates an estimate of repair for $100,000. The policyholder immediately disagrees with this number and advises, “There is no way my house can be rebuilt for that. It cost me more than that when I built it 10 years ago”!

Is this considered a dispute on the amount of loss? Should the policyholder invoke appraisal at this moment? Should the insurance company demand appraisal at this point? Unfortunately, many times, one of the parties has engaged appraisal at this point. However, technically it is premature and there is actually no dispute on the “amount of loss” as of this moment, just a disagreement.

For a dispute to be prime for an appraisal, there must be a dispute between the parties as to the “amount”, not just an “opinion” of the amount. In other words, the carrier actually has an amount on paper of what they have estimated for the damages. Where the policyholder has no actual estimate or reason to show why they disagree – just an opinion that the insurance company is incorrect. Both parties should have produced an estimate in writing for the “amount of the loss”. At this point they would both have  a professional opinion of the loss. The policyholder by way of a contractor’s estimate and the insurance company by way of an adjuster’s estimate.

Now, let’s step back for a minute. Let’s say the insurance company produced an estimate in writing for $100,000 and the insured produced a contractor’s estimate in writing for $175,000. There is now a difference in the estimates of $75,000. Can either party now determine that they have a disagreement on the “amount of loss” and demand appraisal? Not so fast!

The insurance company needs a reasonable time and chance to respond, review, and determine their position with respect to the increase and differences between the estimates. Once the insurance company responds, it is then that it will appear if there is significant disagreement over the “amount of loss” to warrant invoking appraisal. See, both the policyholder and the insurance company are entitled to reasonable time to consider and review the other parties values and the time to respond with either an offer of settlement or an explanation as to why they believe the “amount of loss” is more or less then what the other party submitted. If each party is provided with a reasonable time to respond the dispute could be settled without a need to demand appraisal.

The opinions and differences should be reviewed and discussed between the parties. Both sides should exhaust all efforts to come together and reach an agreed “amount of loss”. This saves both time and money for both parties, especially the insured whose pockets are not as deep as the insurance company. If the dispute still remains tens-of-thousands of dollars off and a mutual agreement cannot be reached to settle the claim, now you have a true impasse that is seasoned for a resolution to be resolved using the appraisal process.

A Kentucky court (Continental Ins. Co. v. Vallandingham & Gentry) ruled; “There must be an honest attempt made by the insured and insurer to meet on the question of loss and damage before the appraisal should take place. The initial disagreement between the parties without some effort to resolve that disagreement is generally not sufficient to make the case ripe for appraisal.”

In closing; it can be summarized that the policyholder has an obligation to present their claim, the insurance company has a duty to investigate the damages in good faith and reply, providing their value of the loss. These differences should be discussed in an attempt to reach a mutual agreement and settlement. If either party disagrees and is not wiling to move any further toward a settlement, the matter is primed to be resolved via the insurance appraisal process.

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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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