Insurance Appraisals: The Most Effective Tool for Ensuring an Equitable Settlement

The Appraisal provision is included in almost every insurance policy written to insure a home or commercial building. You will find it in the Conditions section of your policy. An appraisal is designed as a remedy when the policyholder and the insurance company fail to agree about the amount of the loss.

(Note to those who own property in Alabama: The “Cotton State’ does not currently license someone to be an Alabama public adjuster.  So for you, utilizing the Appraisal process becomes the only effective tool for resolving differences over the value of a loss.  On the second page of the Alabama Department of Insurance’s “Glossary of Common Insurance Terms”, they provide a good, working definition of “Appraisal” that explains the process when a property owner disagrees with the insurance company’s estimate. Go to ).
Man Taking Notes

The typical Appraisal provision says:

If we and you disagree on the value of the property or the amount of loss, either may make a written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

  • Pay its chosen appraiser; and
  • Bear the other expenses of the appraisal and umpire equally.

If there is an appraisal, we will still retain our right to deny the claim.

Appraisal provisions differ a little from policy to policy but are all essentially the same. If either you or your insurance company invokes the Appraisal process in writing, the other must comply and name their appraiser within twenty (20) days. The two appraisers usually are given fifteen (15) days to agree on the third member of the panel called the “umpire”. Any agreement by two of the three appraisal panel members will determine the amount of the loss and settle the dispute.

It is critical therefore that you carefully consider who to select as your competent and impartial appraiser for this process. Experience in the process should be your first consideration. Your appraiser should also be very careful about who he/she agrees to for the Umpire position. The Howarth Group has been hired as the insured’s appraiser almost two thousand (2,000) times and has worked with dozens of excellent umpires who live and work in the Southeast.

Appraisal, when conducted properly, is a civil and effective Alternative Dispute Resolution (ADR) process that is highly respected throughout the country. It does not fit every situation and is best avoided if possible in some circumstances. The final award is not easily overturned.