The appraisal process exists for the purpose of resolving disputes between actual loss amounts and the costs associated with placing policyholders in the same position had the loss never occurred. When a loss occurs an insurance company sends a representative to estimate and hopefully negotiate a “settlement” with the policyholder. The representative may be an employee of the insurance carrier or a contracted corporation or individual. It is in the best interest of the carrier and the representative to close the claim as quickly as possible. Once closed the insurance company can stop any further costs associated with the claim. If a contractor adjuster handled the claim his/her company will be paid as soon as the file closes; again an incentive to close the file.
In their zeal to close the file as quickly as possible adjusters often overlook various items associated with the loss and thus short change the claimant. In many cases the claimant has already spent money to facilitate repairs to their home or business. Problems generally arise when an insurance company offers less money than the policyholder has already paid to correct some items related to the loss. This should be a red flag to the policyholder that negotiations may become protracted. This is the point in the process when you need our services.
Most people have no idea that they can disagree with their insurance company's determination of the value of a loss. Because of this, an insured often accepts an offer that will not actually cover the necessary repair costs. If you carefully review your policy, you will most likely find what is known as an Appraisal Clause. This clause allows you to hire, at your own expense, an independent appraiser to determine the value of your loss. Below, you will find a sample of a typical Appraisal Clause. Keep in mind that all policies are different and you should, therefore, refer to your own copy of the policy to see if this exists.
Typical Appraisal Clause Found In Most Policies
APPRAISAL - If you and we fail to agree on the amount of loss, either one can demand that the amount of the 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 et the amount of the loss.
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