Insurance Appraisal and Arbitration

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Typically speaking an "Appraisal" is meant to allow an independent panel of property damage insurance claim experts to decide on the amount of covered damages owed by an Insurance Company to a policyholder.

Many property insurance policies in Florida have what is called an “appraisal clause”, which provides for an alternative to filing a lawsuit against the Insurance Company in the case of a disagreement over what is owed to the policyholder. Unlike arbitration, Appraisal is meant only for disagreements on the “amount of loss”, or in other words, how much it will cost to repair or replace the property back to how it was before the loss happened.

The Appraisal Clause is utilized when the insurance company and policyholder are unable to agree on the costs to replace and/or repair the property back to its pre-loss condition. Under most appraisal provisions in the State of Florida, upon a demand for appraisal by either party, both sides must name their appraiser within a certain amount of days. The two appraisers will then jointly appoint an Umpire, who will only get involved if the two appraisers cannot agree on the amount of the loss. If an Umpire is required, the two appraisers submit their differences to the Umpire, to resolve the discrepancy.

As the appraisal clause is an ADR (alternative dispute resolution) function, which includes a tripartite panel (A Three-person panel – your appraiser – insurance company appraiser and a neutral umpire) charged with issuing a binding award; for "the amount of loss." Historically, appraisal has been associated with arbitration, as the two are very similar. However, most states, including Florida recognize the distinct difference between appraisal and arbitration.

In simple terms, the basic difference between appraisal and arbitration is arbitration can resolve the entire controversy between the parties, while appraisal is limited to the resolution of specific issues in the valuation of a loss. Appraisal is designed to be quick and efficient If you are facing a property damage dispute with your insurance company regarding the amount that the Insurance Company is offering you in the State of Florida, Insurance Appraisal can be a much more preferred alternative to time consuming and costly litigation.