What is an Appraisal Clause and How Does it Work?

In Florida — as in other states — attempting to recover fully for your property losses can be quite a challenge.  Insurers understand that you may be in a vulnerable position, and they may take advantage by undervaluing your property losses or by otherwise appraising the property at issue in a way that creates an even more lopsided dynamic.

If you find yourself disagreeing with your insurer over the value of your property losses, then you may want to explore the insurance appraisal process.  “Appraisal” is an alternative dispute resolution process that is included in many property insurance policies as a voluntary option in the event of a disagreement.  It’s important to note that appraisal is not a panacea — it is problematic in many ways, though (depending on the circumstances) you may want to consider the option. A Miami property insurance lawyer at Ver Ploeg & Marino can help you take a look at your options and decide if the insurance appraisal process is the best route for you to follow. 

Let’s take a closer look.

UNDERSTANDING THE APPRAISAL PROCESS

The appraisal clause in a property insurance policy allows the policyholder to demand an appraisal of the loss when there is a disagreement.  Each party selects a competent and impartial appraiser to separately evaluate the amount of the loss at issue.  A neutral umpire is also selected — this umpire will determine the correct amount of the loss if the two impartial appraisers cannot come to an agreement.

Appraisal is binding, which is to say that the amount determined by the umpire must be accepted by each disputing party (the policyholder and the insurer).

Given the high stakes of appraisal, it’s important to work with an experienced Miami property insurance lawyer who understands how to select a trustworthy and competent appraiser (and who will ensure — to the degree possible — that the umpire is actually neutral).

APPRAISAL MAY BE FRAUGHT WITH CHALLENGES

Appraisal is fraught with a number of difficulties.  If the umpire is not “neutral,” they might side with the appraiser hired by the insurance company, which can lead to a significant reduction in the value of your claim.  Further, appraisal will lead to a binding result, which may not necessarily be a good thing — as the policyholder, you may want to have the freedom to further negotiate with the insurance company and reach a satisfactory compromise.  With the appraisal “set in stone,” your ability, or the ability of your Miami property insurance lawyer, to negotiate may be somewhat limited.

WHO CAN SERVE AS A FLORIDA INSURANCE APPRAISER?

It may be surprising to learn that there is no law that governs licensing of individuals that are able to conduct an insurance claim appraisal. Because of this, you will need to take precautions when choosing your appraiser. Some factors you should consider include:

• Experience: Experience is key when choosing an appraiser. Be certain that the appraiser you hire has experience in the particular area for which you need assistance. For example, if the dispute is over your roof, the appraiser you retain should be experienced in roofing. On top of this, it is greatly beneficial if the appraiser has experience in interpreting insurance policies and understands their provisions. Having an appraiser that is experienced in both the type of damages and insurance policies will be very helpful to you throughout the process.  
• Reputation: Reputation is important when choosing an appraiser. No matter the amount of experience an appraiser may have, if they do not follow up on what they say they will do or they are difficult to work with, it may be a good idea to look elsewhere for an assistance. 
• Autonomy: When choosing an appraiser, ask them if they work for any insurance companies or in particular the company you are currently in a disagreement with. Some adjusters for insurance companies also work as adjusters for insurers. While this does not necessarily mean the appraiser will not have your best interest at heart, it is something that you should be aware of and address. 

Any questions or concerns you may have regarding appraisers may be addressed in the terms of your insurance policy. If they are not, it is best to seek the advice of a Miami property insurance lawyer at VPM. 

Appraisers and “Disinterested” Clause in Insurance Policy

Parrish, vs. State Farm No. SC21-172 is a recent case decided by the Florida Supreme Court. In this instrumental case, the Florida Supreme Court found that an appraiser cannot be considered “disinterested” if they (or the firm in which they have an interest) “has a pecuniary interest in the outcome of the claim.” In this case, the appraiser’s company was to be compensated via a contingency fee, which meant that the appraiser could not be considered disinterested, even though the insurance company was fully aware of the contingency agreement. 

CONTACT AN EXPERIENCED MIAMI PROPERTY INSURANCE LAWYER FOR FURTHER GUIDANCE

Here at Ver Ploeg & Marino, P.A., our Miami-based attorneys have decades of experience representing policyholders in a range of insurance-related disputes, including those that involve property insurance claims and appraisal conflicts.  Through the years, we have developed a comprehensive understanding of how to navigate the challenges unique to property appraisal disputes and how to secure a result that is favorable to the interests of our client.

Ready to learn more about the process and how we can help?  Contact us via our website or call (305) 577-3996 to schedule a free and confidential consultation with an experienced Miami property insurance lawyer at Ver Ploeg & Marino, P.A.

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