Knowing how to resolve an insurance claim dispute can become tiring, even for the most experienced professionals in the Insurance Claims Handling Industry. Many people file claims on their own and are met with many different reasons WHY their insurance companies are not providing coverage, or even working with them to resolve issues when coverage is afforded early. There are several ways to handle issues like this: Continued direct negotiations with carrier adjusters, mediation, appraisal, legal action or doing nothing at all.
Today we’ll talk about Appraisal. Appraisal is an Alternative Dispute Resolution that has been used for over 100 years to resolve insurance claims issues. The process is similar to arbitration allowing for a three-party panel to come together to set the amount of the loss. Once the amount is set, the insurance companies are bound to pay the amounts awarded as provided through coverage. Below is a sample of some appraisal language that is found in most polices. Every policy differs in content. So, make sure to check if your policy contains this provision. You can even contact your insurance agent to see if your insurance policy contains this type of resolution process or what, if any variation exists. You might even want to think about a different policy that does contain this type of resolution.
Appraisal. If you and we fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent, impartial appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actual cash value and loss to each item. If the appraisers do not agree, they will submit their statements to the umpire. Agreement by the umpire and either of the appraisers will be binding. Each party will pay its own appraiser and bear the other expenses of the appraisal and umpire equally. Even though we may submit to an appraisal, we will retain our right to deny the claim.
Appraisal offers certain benefits in comparison to litigation. For example, most policies require that appraisers be competent and disinterested, meaning that they are well versed in the areas of dispute and are not compensated directly from the outcome of the appraisal itself. Another benefit is that appraisal in intended to keep claims from clogging up the courts system while offering a real conclusion to the claim. As litigation can take years in some cases to finalize a loss, appraisal is meant to fast track the settlement process, usually resolving the dispute within 90 days.
Knowing when to invoke or accept this process is also especially important as not every claim is “ripe” for appraisal. Because there are many factors to consider involving issues with coverage and damages, it’s prudent to contact someone who can advise you (such as a public adjuster or attorney) if appraisal is the best option, when it should be used, or if the carrier has demanded the process forward and you need help to resolve the dispute.
“The Pessimist Sees Difficulty In Every Opportunity. The Optimist Sees Opportunity In Every Difficulty.”
– Winston Churchill