Appraisals

What is insurance appraisal?

Insurance appraisal is an alternative dispute resolution process created to resolve differences or disputes over the amount of loss. Florida generally interprets that to include scope or work as well as the amount of money it will take to complete the work. It is a process that can be invoked by either party to the insurance contract.

Who should I use as an appraiser?

While insurance knowledge is important, construction knowledge and estimating abilities are key in appraisal. If the appraiser does not know building code, the result could be an underestimation of the claim. You should use somebody who is well versed in best construction practices as well as somebody who is up to date and familiar with local building code. For example, did you know that any beach facing windows must have “turtle glass”? “Turtle glass” can add $100 to $500 a window depending on brand and size.

What role does the umpire play in the appraisal process?

The umpire is the tie breaker. He or she serves to resolve the differences between the appraisers. Many times, the umpire is never used, but they must be chosen as a condition precedent to appraisal. The umpire is agreed upon by the appraisers and the not the parties to the insurance contract. Either appraiser can invoke the umpire at any time.

Who makes a good umpire?

Umpires must be fair and impartial. They have to be able to judge the damage and not be influenced by outside factors such as backdoor agreements and handshake deals. The umpire must be able to impartially and fairly resolve the differences between the appraisers.

Is appraisal available to everyone?

No. Many contracts do not allow for appraisal. Some require both parties to agree to appraisal before the process can be implemented. An example of a typical appraisal provision is below:

A commonly see appraisal provision in a standard homeowners (HO3) policy states:

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, 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.

Pros & Cons

Appraisal vs Lawsuit

Appraisal	Lawsuit
Quick – Expedient	Slower – protracted
Relatively less costly	Generally more costly
May be less adversarial	More adversarial
No appellate potential	Appeal is possible
Must pay fees/costs	May recover fees/costs
No firm procedure	Strict procedures