What Is Appraisal?
When the insured and the insurance company fail to agree on the “amount of loss” of a property, appraisal may be an option for dispute resolution.
Appraisal is an escalation method of the dispute resolution process designed to provide an efficient and fair determination of the “amount of loss”.
Appraisal is not appropriate to settle policy disputes of coverage.
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The appraisal process includes a three-party appraisal panel. Each party selects their own appraiser. These appraisers are responsible for assessing the damage and determining the amount of the loss. The appraisers should be qualified, unbiased, and experienced in appraising similar types of property.
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The appraisers conduct an inspection of the damaged property. They assess the extent of the damage, the cause of loss, and any other relevant factors that may influence the appraisal within the scope of the insurance policy.
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Each appraiser prepares a written appraisal report that outlines their findings and valuation of the loss. The appraisers may engage in discussions to try to reach an agreement on the value of loss. If they reach a mutual agreement, their combined appraisal is binding on both parties and an appraisal award will be signed.
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If the appraisers cannot agree on the amount of loss, they jointly select an impartial third party called an "umpire".
If the appraisers cannot agree on an umpire, either party can petition a local court, with jurisdiction, to appoint an umpire.
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Once invoked, the umpire's role is to act as an arbitrator and help resolve the dispute. The appraisers and the umpire, together, review the appraisal reports and any additional evidence. The umpire then issues a binding decision known as the "umpire's award".
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The umpire's award specifies the final amount of the loss. Both the insured and the insurance company are legally bound to accept this award as the final settlement for the claim.
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It is essential for all parties involved to act in good faith and select qualified appraisers to achieve a fair outcome.
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The above is general policy language and not from your actual policy. Some appraisal clause language in policies will change and have different requirements.
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