Many policyholders know the frustrations that can come with filing an insurance claim for property damage. First, they file the claim hoping to get it resolved promptly, only to have it undervalued. When this happens, going through the process of an insurance appraisal may help to resolve the claim. Understanding the role of an insurance appraiser in the claims process can help policyholders be better informed about the process should a dispute regarding the value of the damage arises and an appraisal becomes an appropriate or mandatory remedy if either party demands it.
The Role of an Insurance Appraiser
It’s not uncommon for disputes over the value of a claim to arise between the insurer and the insured. When it happens, going through an insurance appraisal is one option to get the claim settled. However, when it comes to the term appraisal, many may confuse it with a real estate appraisal. An insurance appraisal is different in that some policies require it and/or once invoked the process will put the resolution of the claim in the hands of an appraiser or appraisal panel. An appraisal panel consists of three appraisers — one selected by the insurer, one selected by the insured, and one neutral umpire. But just what does the role of an insurance appraiser entail?Â
An insurance appraiser is a competent and disinterested professional who evaluates a claim to determine the appropriate value of the property and/or the amount of loss. Insurance companies use appraisers’ assessments to determine if they need to pay out on a claim and the claim’s value. Insurance appraisers can be anyone capable of accurately evaluating and determining an amount of loss, but many policies require someone with insurance industry experience, such as an adjuster, engineer, or contractor.
Once a disputed claim has been handed over to an insurance appraiser, they will estimate the loss or damage to the property and the overall value of the insured items, including the property itself. Following their investigation, they will meet with the other party’s appraiser to discuss their findings. If the two appraisers cannot come to an agreed decision on the claim, the umpire will review both of their findings and come to a final decision on the claim.
The role of an insurance appraiser typically includes the following duties:
- Investigating, evaluating, and settling insurance claims;
- Determining whether the insurance policy covers the loss claimed;
- Deciding the appropriate amount the insurance company should pay;
- Ensuring that claims are not fraudulent;
- Contacting others for additional information on the claim;
- Conferring with legal counsel on claims when necessary;
- Keeping claims files, such as records of settled claims and an inventory of claims that require detailed analysis;
- Negotiating settlements; and
- Authorizing payments.
The Pros and Cons of Insurance AppraisalÂ
While going through an appraisal may be a more appropriate remedy – if not mandatory – part of the claims process, it’s not always beneficial to policyholders. There are several pros and cons to invoking an insurance appraisal or being transitioned into a mandatory appraisal process pursuant to the terms of the insurance policy.
Insurance Appraisal ProsÂ
- An insurance appraisal could be the best way to resolve a significant claim dispute with an insurance company if the dispute relates to a disagreement on value and not coverage.
- Policyholders have the potential to add significant value to a claim through appraisal without the added time and expense of prolonged litigation.
- The terms of invoking an appraisal are often already written into the insurance contract.
- Policyholders can prevent an insurance company from dragging its feet, denying a valid claim for no good reason, or engaging in other bad faith tactics.
Insurance Appraisal ConsÂ
- For appraisal to be worthwhile, the disputed difference must be significant. If a policyholder and their insurance company disagree about $5,000, for example, then the appraisal fees would likely exceed any proceeds even if the appraisers rule in the policyholder’s favor.
- There are no guarantees about the appraisal outcome. Once a decision has been reached – either by the appraisers or the umpire – that decision is often final and binding as to the amount of loss. However, carriers may dispute whether a claim is covered under the policy if the decision is not in their favor.
- Some appraisals can take a long time. Policyholders may spend months waiting for their insurer to choose an appraiser, perform a thorough appraisal, negotiate, and then finally receive a decision from the appraisal umpire.
- It can be difficult to find impartial appraisers willing to work for a policyholder, as appraisers are often more interested in working for insurance companies from whom they can get repeat business.
- Impartial appraisal umpires can also be difficult to find and the insurance carrier’s appraiser must approve them.
Complex Appraisal Attorneys
Despite appraisal being a longstanding approach to resolving a disputed insurance claim, its results can often come at the expense of the policyholder. This is because regardless of the outcome of an appraisal, the insurance company can still choose not to pay the appraisal award or fail to pay interest on it. At Raizner Slania, our experienced complex appraisal attorneys can guide you through a large and/or complex insurance appraisal to ensure you receive the proper compensation for your claim. Contact us today to get more information on how we can assist with your claim.