How Does the Insurance Appraisal Process Work?

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When the insured is provided an offer of settlement that they feel does not represent the actual costs of damages, and they are having no luck in negotiating a fairer offer with the adjuster, the policyholder may invoke the appraisal clause.

Upon invoking Appraisal, the insured no longer must worry about the claim, and all the headaches that come along with that. Instead, an independent panel of experts will be tasked to resolve the dispute to conclusion, which includes an appraiser representing the insured, an appraiser representing the carrier, and an Umpire mutually appointed by both Appraisers.

At the onset, the Appraisers will typically exchange claim documentation they received from the side hiring them, such as photographs, estimates, etc. Then, each Appraiser will independently review the material, make site visits, and formulate an itemized estimate of the costs to make the insured whole i.e. what it will cost to repair and replace the property to how it was before the loss happened.

Next, they will then exchange their finalized reports, and attempt to come to a final agreement on the total amount owed to the policyholder. Typically, the Appraisers will then attempt to resolve aspects of their estimates where they do not agree and come to a final amount that they both can agree to and sign off on. If this is the case, the Appraisal is complete, and their award is binding. If they cannot come to a mutual agreement, they will attempt to agree to whatever they can, and then any remaining issues they could not see eye to eye on, the Umpire will be called in to decide on the differences. An Award signed by the Umpire and at least one of the Appraisers will be binding.

Simply put, when the two appraisers are chosen by their appointing parties and complete all required documentation in order to start the process. Shortly after the initial contact, the two appraisers shall agree upon an Umpire. It is our opinion, that the two appraisers should have an Umpire in place before any matters of dispute are discussed. This aspect of the process, in our opinion, is one of the most important mechanics of the entire appraisal.