Appraisal Process

The Appraisal Process Defined

Most policies have a provision specifically set aside for dispute resolution. This process is commonly known as the appraisal process. This process can be found in detail in your loss settlement section of your policy. This provision is set aside for a form of dispute resolution when the policyholder and the carrier do not agree on the amount of the loss. This is an alternative to litigation, appraisal does not address coverage issues but can include or exclude items based on causation depending on the state’s protocols.

How The Appraisal Process Works

The appraisal language in a HO3 policy typically reads as follows:

Appraisal. If you and we fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent, appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actual cash value and loss to each item.

Once the Appraisal clause/provision is invoked, the insured’s appraiser and the insurance carrier’s appraiser will estimate the damage and try to come to an agreement on the amount of loss. If the appraisers fail to agree, they will submit their differences to the umpire. An itemized decision agreed to by two of these three will set the amount of loss. Such award shall be binding. Each party will pay its own appraiser and bear the other expenses of the appraisal and umpire equally.

Here’s a high-level overview of the appraisal process:

Step 1: Disagreement

A dispute arises over the value and/or extent of an insured loss between you and your insurance carrier.

Step 2: Invocation of Appraisal

You or your insurance carrier, in writing, demand appraisal. Each party assigns a competent and impartial appraiser to value the loss. (Your Public Adjuster is your appraiser!)

Step 3: Panel Assembly

The two appraisers select an umpire to be the third party on the appraiser panel. The two appraisers inspect and document the loss and attempt to reach an agreement.

Step 4: Invocation of Umpire

If the two appraisers are unable to reach an agreement, the umpire is called in to settle the dispute. This way, at least two of the three panel members will always set the amount of loss.

Step 5: Final Decision

Once any differences between the two appraisers have been resolved, the appraisal committee will sign and execute the appraisal award.

Step 6: Appraisal Award

The appraisal award is delivered to the carrier to apply coverage and submit payments. This concludes the appraisal process.