What is an insurance "Appraisal Clause" and how does it work?

An appraisal clause is a clause or paragraph found in most but not all insurance policies. It is designed to be a binding way of reaching a settlement when there is a dispute over the amount of a loss between you and your insurance company and can be invoked by either party or may require both parties to agree. It is not common for an insured to request appraisal when both parties are required to agree for the carrier to accept this request. However, when either party can invoke this can be a useful tool depending on your individual claim.

How Does the Appraisal Process Work?

If a policyholder and insurance company can’t agree on the value of the loss, some Florida policies require both parties to agree to Appraisal. Other allow for either party to  demand that the damages be determined by appraisal. Here is how the process works:

  1. Both the policyholder and the insurer will hire an independent appraiser. It will usually state, ” In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other.”
  2. Together, the two appraisers will choose an umpire, who acts like an arbitrator (essentially the judge). The umpire will resolve any disagreements that arise between the appraisers. The Umpire only gets involved if the two appraiser cant reach a settlement. Most policies state,” If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of court of record in the state where the “residence premises” is located.
  3. The two appraisers will then examine the documents and estimations and try to reach an agreement on how much the repair or replacement should cost.
  4. If the appraisers can’t agree on specific items then they will submit their differences to the umpire. In this case the most policies in Florida will state, “If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.”
  5. Once two parties of the appraisal panel come to an agreement they will sign a binding appraisal award. The insurer will pay that amount to the policyholder.

How much does going to appraisal cost? 

Most Policies will state,

“Each party will:

A: Pay its own appraiser: and

B: Bear the expense of the appraisal and umpire equally.”

Umpire cost usually range from $2,000-$4,000 for a residential claim. Of course, the insured will only pay half of this cost. This is something an insured needs to consider this when making the decision to go to appraisal.

If you are considering going to appraisal or the carrier has demanded appraisal and you have to respond you should call a Public Adjuster for a free claim review. This is a binding decision and should not be taken lightly. This will require the guidance and expertise of an Experienced Public Adjuster. Please contact us today for a free claim review at (407) 212-8669.