What Is Appraisal?
About half of the insurance policies sold in Florida contain a provision that gives both the insured and insurance company the right to send an insurance claim to appraisal if there is an amount of loss dispute in South Florida. The appraisal process usually begins when the insurance company and insured disagree as to the cost to repair or replace a covered loss. When these negotiations breakdown, either the insurance company or the insured may request and sometimes demand appraisal.
The appraisal process consists of the insured and the insurance company each choosing an appraiser who will both review the insurance claim and prepare their own estimates as to the cost to repair or replace the covered loss. The two appraisers will also agree upon an umpire who will become involved if the appraisers cannot agree on the amount of loss. If the two appraisers cannot agree on the umpire, a court will appoint the umpire.
If the two appraisers do agree as to the amount of loss, then that amount becomes binding on the insured and the insurance company. If the two appraisers cannot agree on the amount of loss, the amount of loss dispute is sent to the umpire who will be the deciding third “vote.”
Should an Insured Use Appraisal?
The right to request an appraisal is to provide an out-of-court method for insureds and insurance companies to potentially resolve their disagreement without involving the courts. Unfortunately for the insured, this method intended to more efficiently handle insurance claims usually results in less money for the insured for covered losses for several reasons.
First, the appraisal process costs money, which ends up coming out of the insured’s pocket. For example, a typical fee for the umpire starts at around $2,500, half of which is paid for by the insureds assuming both appraisers cannot reach an agreement as to the amount of loss.
Second, rarely do the insured and insurance company’s appraisers agree as to the amount of loss. This means that an umpire will inevitably be used and most umpires are biased against the insured. The reason for this bias is that insurance companies will only use umpires that help reduce their payments to insureds and courts usually appoint an umpire biased against insureds. Given the limited number of individuals that can serve as umpires in amount of loss disputes in South Florida, this severely limits the insured’s ability to have an impartial umpire during the appraisal process. The insured is either forced to agree to use a biased umpire from the insurance company or accept a court appointed umpire who is usually biased.
Third, if there is a serious disagreement regarding the amount of loss, insureds are best situated if they initiate a lawsuit to resolve their dispute with their insurance company. This provides a method of dispute resolution that provides a more fair result to insureds.
However, appraisal does not always result in an unfair result for the insured. There are instances where the insurance company retains a knowledgeable appraiser who either agrees with the insured’s appraiser and/or calculates an amount of loss higher than the initial amount proposed by the insured’s appraiser.
What Can Florida’s Public Adjusters Do to Help?
By using an experienced and qualified public adjuster, such as Florida’s Best Public Adjusters, insureds can more effectively negotiate their insurance claim with their insurance company and avoid the appraisal process when there are amount of loss disputes in South Florida. Should the insurance claim unavoidably enter appraisal, Florida’s Public Adjusters can help the insured through the process as easily as possible, minimizing any further reduction in their insurance claim.