Is your insurance company offering you a low settlement? You do have options.
Filing a property damage claim with your insurance company is not a fun, exciting task. Even more upsetting is an unfair settlement offer. A common misconception is that the policyholder must accept whatever settlement amount the insurance company offers, no questions asked or further negotiations involved. This is simply not true.
In many cases, utilizing the appraisal language in the insurance policy is a good option for the policy holder. The process tends to be much more informal than arbitration or certainly litigation, as well as being relatively quick, simple, and inexpensive. The policyholder, or the insurance company, can request appraisal in writing if at an impasse on a settlement. Each side then hires their own independent, unbiased representative, called the appraiser, to try to come to an agreement. If they cannot agree on a settlement, an umpire is agreed upon and brought in to facilitate a mutual and fair outcome.
-Greg Raab, Director of Operations
Policyholders have a remedy provided in the policy, called the Appraisal Process, also known as the Appraisal Clause or Statutory Appraisal.
Facts about the Appraisal Clause:
- Many residential and commercial property insurance policies include an Appraisal Clause.
- This can be found in the section of your policy titled, “Conditions.”
- Appraisal is similar to mediation or arbitration and is highly effective.
- Policyholders can consider the Appraisal process if:
- The insurance company is offering an unfair settlement.
- The insurance company is not willing to negotiate.
How it works:
- Once the Appraisal Clause is invoked, each party – the policyholder and the insurance company - selects their own Appraiser.
- A ‘neutral umpire’ is selected by the two Appraisers to serve on the Appraisal Panel. If they cannot agree on the umpire, a court is asked to appoint one.
- The two Appraisers try to agree on a settlement amount and if they are not able to, they submit their areas of disagreement to the umpire.
- Once two-thirds of the panel agrees on an amount, they sign an Appraisal Award.
- The insurance company is then responsible for payment within the time allowed in the policy.
The Appraisal Process is advantageous in comparison to litigation. An appraisal’s panel is comprised of people and experts who are familiar with identifying and valuing property damage claims, versus using a jury containing people who have little to no industry knowledge. Litigation is also costly and time-consuming, whereas Appraisal costs are reasonably lower and cases are resolved in quicker fashion.
One important factor to keep in mind is that policyholders are not the only ones who can invoke the Appraisal process. In fact, insurance companies can too, to resolve disputed claims. Insurance companies sometimes use an Appraisal Request as a method to encourage policyholders to accept their settlement offer. If you find yourself in this situation, it is vital that you have your claim reviewed by an expert Appraiser advocating on your behalf.