If you are a policyholder in Texas, the appraisal clause may come into play in the event of a dispute with your insurer regarding the amount of loss. In this process, both parties choose and agree upon a competent and impartial appraiser, who will evaluate the evidence and make determinations regarding the amount of loss and actual cash value.
However, what happens if the appraisers cannot agree on specific categories, such as Dwelling, Other Structures, O&L, etc.? Does this deviation from the agreed-upon categories go against the tenets of the Appraisal Clause?
In Texas, the appraisal panel must determine the amount of loss, actual cash value (ACV), and the amount of loss each item suffers. The focus should be on determining the value of the loss and the settlement amount, not separating out individual values and categories. While the carrier’s appraisers may prefer that the values be separated out, it is not a requirement of the Appraisal Clause in Texas.
If the appraisers cannot agree on a particular category, such as O&L or Coverage A, then they must provide evidence and facts to support their position. The Umpire may need to intervene to make a decision based on the evidence presented. The appraisal panel should be independent and unbiased and evaluate the evidence presented by both parties carefully.
In essence, both appraisers must agree on the amount of loss and use their discretion to determine the ACV and the amount of loss each item sustains. Any deviation from the agreed-upon categories should not affect the appraisal process’s impartiality and should focus on the actual loss amount.
If you are a policyholder in Texas, you should understand the Appraisal Clause and seek legal advice if you have concerns regarding the appraisal process.