Understanding Your Homeowner’s Insurance Claim Appraisal

Chances are you’ve been through an appraisal process before. Most new homeowners have their home appraised prior to purchase. Insurance appraisals are entirely different from home purchase appraisals. Before we begin to cover the insurance appraisal process, it’s important to note that you should speak to an experienced attorney before you agree to enter into the appraisal process with your insurance company.


Now, let’s talk about the appraisal process as it relates to your homeowner’s insurance claim. We’ll cover the following topics:

  1. What is an appraisal?

  2. How does the appraisal process work?

  3. What is/is not eligible for appraisal?


1. What Is an Insurance Appraisal?

Simply put, an insurance appraisal is an alternative way for homeowners and their insurance companies to determine the value of the homeowner’s loss. It is not a lawsuit (although it is very similar to an arbitration). It is a process that relies on the expert opinions of uninterested parties – or appraisers and potentially an umpire.



2. How Does an Appraisal Work?

Homeowners tend to think they are in the clear once their insurance company determines that their loss is covered under their insurance policy. Not so. Insurance companies have several tricks they use to try to deny you full payment for your claim. One such trick is the appraisal process.


Here’s how it works: Suppose you (the homeowner) and your insurance company disagree about the valuation of your loss. Either you or the insurance company can request to have the amount of damages determined by third-party appraisers. Appraisers assess the monetary value of the damage to your home. Usually, it is the insurance company that wants to send a case to appraisal since this tends to favor them, and it can be time-consuming, confusing, and costly for homeowners.


An appraiser for each side will determine how much money you can recoup for the loss of your property. The process will generally proceed in this way:

  1. You (the homeowner) and your insurer will each hire an independent appraiser.

  2. Both appraisers will select an arbitrator (called the umpire) who will act as a judge and settle any disputes between the appraisers. The two appraisers and the umpire make up what’s called the appraisal panel.

  3. The appraisers review all documentation and estimations to determine how much it would cost to repair or replace the item(s) in dispute. The goal is for the two appraisers to come to an agreement.

  4. If the appraisers can’t agree, the umpire will review each appraiser’s documentation to settle the disagreement.

  5. The panel will come to an agreement (with or without help from the umpire) and will sign an appraisal award. The appraisal award is the final determination of the value of your loss. At this point, the award is binding, and the insurer will have to pay you, the policyholder, the agreed upon amount.


Choosing an Appraiser

You probably don’t know an appraiser offhand whom you trust to settle your dispute. That’s OK. Your attorney has experience dealing with insurance appraisals and will be able to help you find an independent appraiser who is qualified to do the job. You want your appraiser to have previous experience working with the specific property damage that’s in dispute so that he or she can give an accurate estimation of how much it will cost to replace or repair the item(s).


While your appraiser can advocate for you by giving a fair cost estimate, he/she cannot be biased toward you or toward any financial incentive that benefits you. The same is true for the appraiser your insurance company hires.


3. What Is/Is Not Eligible for Appraisal?

Disputes between you and your insurance company about the value of your loss are eligible for appraisal. The value of your loss is the cost to repair/replace property based on how much that property is worth. If the dispute is about whether or not something is covered (i.e., your insurance company denies your claim), then you’re dealing with a coverage dispute instead of a cost dispute. Coverage disputes are not eligible for appraisal.


There are some things the appraisal panel will not consider during their appraisal process. These include:

  • Scope of coverage

  • Limits of coverage

  • Who is at fault

  • Questions about deductibles

  • What’s already been paid on the claim

These issues typically have to be resolved prior to the appraisal process taking place. Always speak to an experienced attorney before agreeing to submit to the appraisal process with your insurance company.


If your insurance company is attempting to submit your homeowner’s claim to appraisal or if you have questions about the appraisal process, call PZ Law Firm at (407) 500-EZPZ (3979) today. Losing shelter or possessions of value is difficult. Navigating your homeowner’s claim process should not be. Call the PZ Law Firm today to make it easier.


Disclaimer: This column does not create a client-attorney relationship and is not intended as legal advice. Should you need any legal advice, speak to an attorney who is skilled in the area and jurisdiction you require.

PZ Law Firm, P.A.

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