Understanding the Appraisal Process
The appraisal process is available when policyholders and insurance companies cannot agree on the amount or scope of a claim. This process is initiated through a formal written request from either the policyholder or the insurer.
Before resorting to an appraisal, both parties must make reasonable efforts to reach an agreement on the damages and their value. The appraisal process is not suitable if no attempt has been made to resolve the disagreement initially.
In the appraisal process, each side selects an independent and qualified appraiser to assess the damages and estimate repair costs. The appraisers will then work together to choose an unbiased umpire to help settle any disputes.
How the Appraisal Process Works
If disagreements arise regarding the cost of repairs or damages, the appraisal clause allows both parties to resolve the issue without resorting to legal action. Once the process is triggered with a formal request, each party selects an impartial appraiser.
The appraisers visit the property to assess the damage and independently prepare their cost estimates. They will then compare the estimates and try to negotiate an agreed-upon amount. If they cannot agree, the umpire will make the final decision.
The appraisers are compensated separately by the respective parties, and the umpire’s fee is typically divided equally. After the appraisal concludes, the final agreed-upon amount determines the new repair cost and scope for the policyholder.
