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What is an Appraisal Clause and How Does it Work?

Fri Nov 23rd, 2018 on     Property Insurance,    

In Florida — as in other states — attempting to recover fully for your property losses can be quite a challenge.  Insurers understand that you may be in a vulnerable position, and they may take advantage by undervaluing your property losses or by otherwise appraising the property at issue in a way that creates an even more lopsided dynamic.

If you find yourself disagreeing with your insurer over the value of your property losses, then you may want to explore the insurance appraisal process.  “Appraisal” is an alternative dispute resolution process that is included in many property insurance policies as a voluntary option in the event of a disagreement.  It’s important to note that appraisal is not a panacea — it is problematic in many ways, though (depending on the circumstances) you may want to consider the option.

Let’s take a closer look.

Understanding the Appraisal Process

The appraisal clause in a property insurance policy allows the policyholder to demand an appraisal of the loss when there is a disagreement.  Each party selects a competent and impartial appraiser to separately evaluate the amount of the loss at-issue.  A neutral umpire is also selected — this umpire will determine the correct amount of the loss if the two impartial appraisers cannot come to an agreement.

Appraisal is binding, which is to say that the amount determined by the umpire must be accepted by each disputing party (the policyholder and the insurer).

Given the high stakes of appraisal, it’s important to work with an experienced attorney who understands how to select a trustworthy and competent appraiser (and who will ensure — to the degree possible — that the umpire is actually neutral).

Appraisal May Be Fraught With Challenges

Appraisal is fraught with a number of difficulties.  If the umpire is not “neutral,” they might side with the appraiser hired by the insurance company, which can lead to a significant reduction in the value of your claim.  Further, appraisal will lead to a binding result, which may not necessarily be a good thing — as the policyholder, you may want to have the freedom to further negotiate with the insurance company and reach a satisfactory compromise.  With the appraisal “set in stone,” your ability to negotiate may be somewhat limited.

Contact an Experienced Miami Property Insurance Lawyer for Further Guidance

Here at Ver Ploeg & Lumpkin, P.A., our Miami-based attorneys have decades of experience representing policyholders in a range of insurance-related disputes, including those that involve property insurance claims and appraisal conflicts.  Through the years, we have developed a comprehensive understanding of how to navigate the challenges unique to property appraisal disputes, and how to secure a result that is favorable to the interests of our client.

Ready to learn more about the process and how we can help?  Call (305) 577-3996 to schedule a free and confidential consultation with an experienced Miami property insurance lawyer at Ver Ploeg & Lumpkin, P.A.

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