When a dispute arises between the Insurer and the Insured regarding the settlement amount, either party may invoke the policy’s Appraisal Clause as an ADR method to resolve the claim. Often, during claim negotiations, the Insurance Company may undervalue the claim, overlook damages, and ignore valid arguments that the insured and/or their Public Adjuster makes. Usually, this results in an “impasse”.
When an insured invoke the appraisal clause to dispute the Carrier’s offer, it is very important that they appoint an experienced and well-educated appraiser who not only understands the subject matter of the dispute, but also the components of the appraisal process.
The Policy’s Appraisal Clause is a form of Alternative Dispute Resolution (ADR). While it generally calls for expertise in the subject matter of the underlying dispute, Policyholders and Public Adjusters must also ensure that they choose a professional who has the required expertise in the mechanics and procedural components of “tripartite” arbitration/appraisal. This more often than not is the most critical skill set in an effective Appraiser. The illustration below diagrams the typical Appraisal process.
Keep in mind that the appraisal process is essential, although not universally, the last chance to identify and support the policyholder’s sustained damages. It is always possible that the appraisal can rule in the favor of the Insurer, leaving the insured with an insufficient amount to recuperate from their loss. This is known to happen when the Insured appoints an inappropriate choice in Appraiser, specifically, choosing someone who is not a professional Appraiser but rather a contractor that they met during the original adjusting process. Often, unsavory individuals involved somehow during the claim process will misrepresent either themselves or even the Appraisal process, to convince the policyholder to “name them” as their Appraiser. Of course, Insurance Companies will typically not protest the policyholder’s choice to appoint a ” random contractor” or tradesperson who is in essence, under-equipped to conduct themselves in a high-risk, quasi-formal process that relies more on mental abilities and knowledge than physical craftsmanship. Hopefully, the policyholder has either a Public Adjuster or Attorney working closely with them during their claim and can refer to their “network” of professionals when choosing an Appraiser. The following information provides simple tips that a qualified and professional Appraiser should always utilize when acting in the capacity of an Appraiser.
The moment the claim enters the appraisal process, it is imperative that the appraiser prepares well for the presentation of the case. Here are a few simple guidelines to remember when preparing for the appraisal: