Many homeowners are guilty of the same thing- they have never read or understood their homeowner insurance policy. Buried towards the end of the policy is oftentimes an appraisal provision. We will review appraisal provisions in property insurance policies in Florida, exploring their purpose, process, and potential benefits for policyholders.
Appraisal provisions in property insurance policies are an alternative dispute mechanism to resolve disputes between policyholders and insurers regarding the value of property damage and the appropriate amount of insurance coverage. There are two types of appraisal provisions- unilateral or bilateral provisions. When a disagreement arises with a unilateral provision, either party can trigger the appraisal provision to seek an impartial evaluation of the loss. With a bilateral provision, both parties must agree.
Each party hires an appraiser to represent them. The insured must pay this appraiser out of pocket. If the appraisers cant come to an agreement on the valuation of the claim, it goes to a neutral evaluator called an umpire. The umpire has the final say regarding the valuation of the claim. The insured and insurance carrier split the cost of the mediator. The downside of appraisal is that the final valuation and determination is taken out of the insured’s control.
Our firm has seen a trend with certain insurance carriers that are under paying insurance claims and when insureds challenge the lowball valuation of the claim, they immediately invoke appraisal. We have also repeatedly seen insurance carriers attempt to limit the scope of what is being looked at and included in the appraisal process.
If this sounds familiar, please contact our firm immediately as the insurance company may be violating the law and the insurance adjuster code of ethics.
Weston Ehrman, Esq.
