The Appraisal Process

by Benjamin Goss, MBA

When a property owner experiences damage due to a storm, one of the first steps they take is to file an insurance claim. However, before an insurance company can provide a payout, they must first determine the value of the damage. Often, a claim will be evaluated by the insurance company’s adjuster and the homeowner does not have enough money to make repairs. When the contractor and/or homeowner disagree, sometimes those involved may choose to go to Appraisal. The appraisal process may or may not be triggered in the process of a lawsuit against the insurance carrier.

The appraisal process is an essential component of insurance claims for property loss due to storm damage. It involves a thorough examination of the property, the extent of the damage, and a determination of the cost to repair or replace the damaged property. The goal of this process is to provide an accurate estimate of the loss so that the insurance company can provide an appropriate payout.

The appraisal process typically involves three parties: the insurance company’s adjuster, the policyholder’s appraiser, and a neutral appraiser. The neutral appraiser is typically selected by both the insurance company and the policyholder’s appraiser and is tasked with providing an objective and unbiased assessment of the damage.

The first step in the appraisal process is for the policyholder to determine if they do or do not agree with their insurance company. The insurance company will then send an adjuster out several times to assess the damage and determine the initial estimate of the loss. The policyholder or the insurance company may opt to start the appraisal process. Then both parties select their own independent appraiser to provide a second opinion and assess the damage independently.

The policyholder’s appraiser will then meet with the insurance company’s adjuster to review the damage and determine a mutually agreed-upon estimate of the loss. If the two appraisers are unable to agree on the extent of the damage or the cost to repair or replace the damaged property, they will select a neutral appraiser, often referred to as the umpire, to provide an unbiased assessment.

The Umpire, a.k.a. neutral appraiser, will then review the damage and the estimates provided by the two appraisers and make their own determination of the loss. The Umpire’s decision is typically final and binding and will determine the payout provided by the insurance company. Sometimes the Umpire will agree with one appraiseer or the other.

It is important to note that the appraisal process is not a legal proceeding and does not involve attorneys or judges. It is simply a process to determine the value of the loss and provide a payout for the policyholder. In general, to conclude the appraisal process, two appraisers must come to agreement. This may be the Umpire + one other appraiser if the two sides cannot come to an agreement.

One of the benefits of the appraisal process is that it can help expedite the claims process. Rather than getting bogged down in a legal battle, the appraisal process allows for a quick resolution of the claim. It is also typically less expensive than going to court, as the cost of the neutral appraiser is typically shared between the two appraisers.

However, it is important for policyholders to understand that the appraisal process is not always perfect. There are instances where the estimates provided by the appraisers may not accurately reflect the true extent of the damage or the cost to repair or replace the damaged property. In such cases, the policyholder may choose to dispute the appraisal and pursue other avenues to receive a fair payout.

It is also important for policyholders to understand the limitations of their insurance policy. Some policies may not cover all types of storm damage or may have limits on the amount of coverage provided. Policyholders should review their policy carefully and discuss any questions or concerns with their insurance company before filing a claim.

For a clear and definite understanding of how the appraisal process impacts a property owner’s claim for loss, it is highly recommended that an attorney be consulted. The attorney should be a specialist in first party insurance policies reviewing both the claim and the policy in question.

In conclusion, the appraisal process is a critical component of insurance claims for property loss due to storm damage. It may provide a more objective and unbiased assessment of the damage and cost to repair or replace the damaged property, allowing for a quick resolution of the claim. While the process is not perfect and may have limitations, it is an important tool for policyholders to ensure they receive a fair payout for their losses.