Understanding Appraisal Clauses in Property Insurance
When commercial or residential property has suffered damage due to a storm, fire, criminal activity, defects in construction, or other causes, there’s a good chance the insurance company and the property owner will have differing figures on the value of the property losses that should be covered under the insurance policy. The most straightforward way to resolve this type of conflict is to have a Miami insurance claim lawyer conduct negotiations with the insurer on behalf of the property owner. At Ver Ploeg & Marino, we’ve been protecting the interests of property owners for decades, so we’ve seen how effective the results can be with the right negotiation skills.
However, negotiation is not the only option for resolving a disagreement about the value of a covered loss. Property owners can file a lawsuit to let a judge weigh the evidence and make a determination. They can engage in mediation with an insurance company. Or, if their policy allows it, they can invoke the appraisal clause.
Sometimes, this approach works well for property owners, and at other times, it leaves them feeling frustrated and cheated. There are some important factors to understand before invoking the appraisal clause in your insurance contract.
What is an Appraisal Clause?
In this context, an appraisal is not just a valuation of property but a specific form of alternative dispute resolution with a binding outcome. While it has traditionally been included in many insurance policies as an optional method for resolving disputes, some insurers are discontinuing the practice. A Miami insurance coverage lawyer could examine your policy and determine whether an appraisal is even an option in your situation. If so, the attorney can help you weigh the pros and cons of using the procedure in your particular circumstances.
When you ask for an appraisal as a means of resolving a dispute about the value of a claim for property damage, you are agreeing to be bound by the result of the process. There’s no opportunity to appeal if you disagree with the outcome.
The way the appraisal process works is that both parties, the property owner and the insurance company, hire their own independent appraiser to evaluate the value of covered losses. Then a neutral third-party, known as the umpire, reviews the two appraisals and makes a determination as to what the value of the loss should be. Essentially, the umpire acts as a judge in the matter. And the umpire’s decision is final.
Appraisals Can Vary Wildly
Florida law does not require a license to conduct property appraisals. Anyone can market themselves as an appraiser, regardless of knowledge or experience. That means that if you want to resolve your dispute through the appraisal process, you need to do some research to find an appraiser who is truly qualified in order to get the right result.
You want someone with focused expertise assessing the type of damage you’re dealing with so that they can provide detailed explanations about the extent of damage and the cost of repair or replacement. A knowledgeable Miami insurance claim lawyer will be able to help you find an appraiser who not only has the right qualifications but also a solid reputation in the business.
Of course, the insurance company will have a group of appraisers that they work with who will focus on issues from the insurer’s perspective. So it’s quite likely that the result of their appraisal will not be the same as the result from an appraiser who has the interests of the property owner at heart.
The Umpire as Judge
When the appraisals differ in outcome, then the results are submitted to an umpire who will make a decision based on the information in the appraisals. Since the umpire’s decision settles the matter and cannot be appealed, the umpire is put in a very powerful position.
How is that umpire chosen? Do they need certain qualifications? Florida law is not always clear. Section 627.70151 of the Florida Code outlines very limited situations in which a policyholder or insurance company can challenge the impartiality of a proposed umpire and seek to disqualify that umpire. For instance, if someone proposes to use a close family member of the property owner as an umpire, the insurance company would have grounds to say “no.” Similarly, if a person proposed as an umpire used to work for the insurance company, the property owner could ask to have that person disqualified.
In some cases, the appraisers chosen by each party to the dispute can select an umpire they both agree on. If they can’t agree on someone, or if they are not expected or trusted to choose properly, the court can appoint an umpire.
Consider the Alternatives Before Invoking the Appraisal Clause
If mediation fails to produce a mutually satisfactory agreement, the parties involved can pursue other options. If negotiations fail to resolve a conflict, a Miami insurance claim lawyer can continue to negotiate for a more favorable outcome. If a judge rules against you in litigation, you can appeal the application of the law. However, if an umpire rules against your interests in an appraisal proceeding, you are bound by the result. For that reason, it is important to assess all the options before determining to go ahead with an appraisal.
Ver Ploeg & Marino Can Help with Appraisal Issues
If you’re deciding whether to use the appraisal process or you’ve encountered problems with the process, the experienced insurance attorneys at Ver Ploeg & Marino are ready to assist. We understand how to protect your interests when using this process and how to resolve conflicts that can arise during the process.
People often use appraisals to avoid lawyers and courts, but as a practical matter, when you want your rights protected under the law, there is no better resource to turn to than an attorney experienced in that area of law. To learn more about the assistance we can provide in your specific circumstances, we invite you to call us at 305-577-3996 or contact us online to schedule a confidential consultation.
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