Appraisal – If you are like most of my clients, the first question when you hear the word “appraisal,” is
what is it? Insurance policies can be long and confusing. On top of that, it’s not like people have an
opportunity to change words or phrases in an insurance policy that are unfavorable to them. For these
reasons, most people obtain an insurance policy and never read it. As such, most of my clients find out
appraisal may be invoked in their situation when I am discussing the case with them during the claims
process.
So what is appraisal in the context of property insurance disputes? Appraisal is a process where the
insured (you) selects an appraiser and the insurance company selects an appraiser. Each party (you and
the insurance company) is responsible for paying the cost of their appraiser. The appraisers will inspect
the property and prepare an estimate of the damages that they believe will put your property back to its
pre-loss condition. Typically, the estimate from each appraiser will be different. At this point, the
appraisers will negotiate to try to reach a resolution on an estimate (i.e., amount of money) to fix your
property. If the appraisers are unable to reach an agreement, then they will select an umpire. An umpire
is not calling balls and strikes per se, but they do make the ultimate call. The umpire may inspect the
property and/or review the photographs and estimates from each parties appraiser, then ultimately
determine the final estimate (i.e., amount to repair your home). This is what is called an appraisal
award. Once an appraisal award is determined, the terms of the policy will be applied to the award,
which may change the amount of money an insured will receive. This process is complicated as it
involves policy interpretation, which is why having an experienced property attorney to assist you with
the appraisal process is important.
Appraisals are becoming more frequent in property insurance disputes. For years now, appraisal has
almost always been an option pursuant to the terms of an insurance policy. However, there were two
types of appraisal language: compulsory and non-compulsory.
Compulsory appraisal language is when the parties (insured and insurance company) do not agree to the
scope and price of the repairs, one party may invoke appraisal and, if that happens, the other party shall
agree to appraisal. The non-compulsory appraisal language is when the parties do not agree to the
scope and price of the repairs, one party may invoke appraisal and, if that happens, the other party may
agree to appraisal. Accordingly, in an insurance policy with compulsory appraisal language, when an
insurance company demands appraisal over a price and scope dispute, the insured must go through with
the appraisal process.
Until recently, appraisals were not as common because only a few insurance companies used
compulsory appraisal language in their policies. However, when SB76 was passed in 2021, it allowed an
insurance company to invoke appraisal in response to the statutory notice required by SB76. Specifically,
Florida Statute § 627.70152(4)(b) states, “If an insurer is responding to a notice provided to the insurer
alleging an act or omission by the insurer other than a denial of coverage, the insurer must respond by
making a settlement offer or requiring the claimant to participate in appraisal or another method of
alternative dispute resolution. . .” (emphasis added) Because of this change, we may continue to see an
uptick in appraisal demands.
Once an appraisal is demanded by the insurance company, picking an experienced appraiser is crucial.
As detailed above, the appraiser will be the person estimating the amount of damages, negotiating with
the insurance company’s appraiser, and potentially making the case to an umpire on why you should
receive more money. Here are a few things to look for when selecting an appraiser:
1. Knowledge – Appraisers must have extensive knowledge in the construction industry. Numerous
issues and arguments from the insurance company’s appraiser will come up during an appraisal
process and they must be able to respond accordingly. A few of these include, but are not
limited to, reparability of the roof, code compliance, whether items are still being
manufactured, and the market cost of the items at the time of the appraisal.
2. Experience – Appraisers must have experience in both estimating and the appraisal arena.
Appraisers and umpires are a small network of people and most know each other. Accordingly,
the key is retaining an experienced appraiser that knows the appraisers and umpires. This allows
your appraiser a better chance to negotiate an amicable resolution, understand what arguments
must be made, and know the tendencies of the opposing appraiser and/or umpire.
3. Speed – This one is simple. The longer the appraisal process takes, the longer an insured must
wait for his or her answer. Having a damaged home is stressful and the unknowns of whether
you will receive enough money to repair your home are even more stressful. As such, selecting
an appraiser that is quick to schedule inspections and start the negotiating process is crucial.
Here at Cohen Law Group, we have experience with numerous appraisers throughout the State of
Florida. If you need assistance with selecting an appraiser or would like guidance through the appraisal
process from an experienced property attorney, please contact the Cohen Law Group.
RICK BRIGGS, ESQ.
Attorney
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