Appraisal is an interesting animal that really only a few insurance companies use regularly today. State Farm and Florida Farm Bureau as well as several other carriers will use the appraisal process on almost any disputed damage claim. First of all, appraisal can only be used when the claim has been confirmed. In other words, if your insurance company found sinkhole activity and told you they would repair it but the only dispute is how to repair it, appraisal is appropriate. If your insurance company did not find sinkhole activity and has denied your claim altogether, appraisal is not appropriate. Appraisal is what we refer to as an alternative dispute resolution. Meaning it is an alternative to a trial or litigation. Not very insurance company has an appraisal provision in their insurance policy so we encourage you to look at yours so you know whether this may apply to you. There must be an appraisal provision in the policy that covers your loss for the insurance company to demand it.
Here is the abbreviated version of how most appraisals work. Once there is a dispute, your insurance company can demand the dispute be settled through the appraisal process. The first question is always “can we avoid it or get out of it”. In the vast majority of cases the answer is no. Florida courts like provisions similar to appraisal because it keeps those cases out of their court room and eliminates trial so judges are usually encouraged to force the parties to appraisal. There are rare circumstances where we have argued against appraisal and won but, they are rare. Once the appraisal process is in motion, each side (homeowner and insurance company) needs to select someone who can act as their representative appraiser. This person can be an attorney, contractor, public adjuster, engineer, etc. Generally, a homeowner will not be allowed to act as their own appraiser.
Once each side has hired their appraisers those two appraisers will agree on a third person who is commonly referred to as the umpire. The umpire again can be an attorney, judge, mediator, public adjuster, contractor, etc. Most often the umpire is a retired judge and/or mediator. At this point, the two appraisers will begin to obtain estimates on what they believe it will cost to repair the home. Once they have completed their investigations, the two appraisers will present their estimates and opinions to the umpire who will then decide which estimates are appropriate. The umpire can accept either sides estimates or come up with his own that may be higher, lower or in between the two estimates presented to him. Once the umpire renders a decision it is issued in the form of an appraisal award. The insurance company is then obligated to pay this amount, usually within sixty days. Once the award is paid, the claim is resolved. Through appraisal, the case is ensured that it won’t go to trial and saves on litigation expenses. For a homeowner, if your insurance company demands appraisal you must hire someone who is well versed in the engineering, geology and who can argue and convince the umpire. The selection of your appraiser is extremely important and we always encourage homeowners to interview several candidates. Our office does act as appraisers on behalf of homeowners and we know several other options should you have any questions.