Appraisal Clause Process


When a home or business owner wants to dispute the insurance company’s findings they can do so via the appraisal clause found in most policies.


It will read something like this in your policy:

APPRAISAL – If you and we fail to agree on the amount of loss, either may demand that the amount of loss be set by Appraisal. If either makes a written demand for Appraisal, each shall select a competent, independent appraiser. Each shall notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial Umpire. If the two appraisers are unable to agree upon an Umpire within 15 days, you or we can ask a judge of a court of record in the state where the residence premises is located to select an Umpire. The Appraisers shall then set the amount of the loss. If the Appraisers fail to agree within a reasonable time, they shall submit their differences to the Umpire. Written agreement signed by any two of these three shall set the amount of the loss.

What about hiring an attorney?

When hiring an attorney the process can takes years to settle plus you will incur large legal fee’s. The appraisal clause has specific time lines in place so this doesn’t happen. Also most attorney’s are not experts in the construction field.


What about a public adjuster?

Public adjusts are helpful, however ultimately if the insurance company does not agree on his or her findings the carrier still has the last word. In the appraisal clause process your loss is determined by two disinterested parties. If they don’t agree they submit their differences to a third neutral party called an umpire. The umpire must be agreed upon by the two appraisers. Any agreement between one of the appraisers and the umpire is binding. This takes the final decision making ability out of the hands of the carrier.

The Appraisal Clause Process does vary from entity to entity. However, in most cases, a third-party, objective individual or entity will determine the appraisal value. That is the fair way to ensure that neither party is taken advantage of during the process. This entity will assess the damage that was done to the property, object, or area. Also, the value of the thing under discussion needs to be taken into consideration. That refers to the current value. For example, envision that someone purchased a television set ten years ago for $500. In a home robbery, that television set was stolen. Therefore, the homeowners think that they should receive $500 in order to replace the television, but they must take into account what the television was worth at the time that it was stolen. Chances are, it was no longer worth $500. Therefore, the appraiser needs to take into consideration what the value of the object was at the time that it was stolen or damaged. That is generally the amount for which individuals receive reparations.

The appraiser may also need to account for any damage that was done to the item before it was stolen or damaged. For example, an item that was in mint condition was worth more than one that was in poor condition. The goal of the appraisal to provide people with the money to replace what they had, not necessarily to provide them with something better than what they had. Also, people need to check to see if they are responsible for a certain deductible. Depending upon the total appraised value of the item, people may be responsible for the entire cost if they want to replace it.

Hebert & Associates