Instances of property damage can be frustrating for commercial property owners to navigate. While many hope filing an insurance claim will be painless, some policyholders may find themselves embroiled in a dispute with their insurer over its findings. When this happens, an insurance appraisal may help resolve the issues at hand. Understanding the insurance appraisal process and its complexities can help commercial policyholders better understand their options should a dispute over a claim arise.

The Insurance Appraisal Process

When it comes to insurance claims, it’s not uncommon for policyholders to disagree with their insurance providers. For instance, an insurer may offer a claims settlement that is much lower than anticipated or the scope of damages determined by the insurer may be much different than the insureds. Disagreements about the amount of the loss are fairly common during the insurance claims process. However, if the insurance company refuses to negotiate, invoking the appraisal process may determine the true and accurate value of the loss.

The goal of an appraisal is to get the outside opinion of a professional on the value of the property and the damages sustained. The process of invoking an appraisal clause is a contractually binding course of action to settle valuation disputes between insurers and policyholders. In the event, a claims dispute arises, in most policies either the policyholder or the insurance company can invoke an appraisal clause. Under most insurance policies, both the insurer and the policyholder appoint an appraiser. The appraisers selected must be competent and disinterested professionals who will evaluate the claim and calculate a valuation of the amount of loss.

Invoking an Appraisal Clause

In Texas, most commercial property insurance policies include an appraisal clause. However, the process can vary depending on the companies involved and the policy itself, as each policy is unique. Regardless, insurance policies will include a conditions section that outlines how the appraisal process can be invoked and what it entails.

Most policies outline that if the parties disagree on the amount of loss, then either may demand an appraisal of the loss. In these instances, each party will need to hire a competent and neutral appraiser within the specified number of days after receiving a written request from the other party. The two appraisers will then choose an appraisal umpire to render a final, binding decision if the two appraisers cannot reach a final agreement. The appraisers will separately assess the amount of loss and submit an agreement to both parties to settle the dispute. The parties must split the expenses of the appraisal including the cost of hiring their individual appraiser and the umpire. 

Selecting an Insurance Appraiser

Once the decision has been made to invoke an appraisal clause, the next step for policyholders is to hire an appraiser. Insurance appraisers should be competent and disinterested individuals who will evaluate the claim at hand and then determine the value of the property or the amount of loss. Often an insurance appraiser is an adjuster with firsthand experience in insurance claims. However, property insurance appraisers can also be a contractor, engineer, or anyone capable of accurately evaluating and determining the amount of loss sustained.

If the Appraisers Disagree

In certain instances, both the insured and the insurer’s appraisers may not agree on the value of the claim. In these cases, an umpire will then step in to schedule a meeting with both the insured and the insurer, where each side will present its position to the appraisers and the umpire, following which the appraisal award will be determined and issued by the umpire. It is in the best interests of a commercial policyholder to obtain legal counsel well before this meeting. The insured must have effective advocacy so the umpire can best understand the view of the policyholder, as appraisers often act in favor of the insurer.

Policyholders also require the guidance of experienced legal counsel because even after the appraisal award is entered; insurance companies often retain the right to deny a claim. In these instances, parties can spend an exorbitant amount of time going through an appraisal, paying money to the appraisers and an umpire, only to have the insurer deny the claim regardless and refuse to pay the award. These problems reflect the massive imbalance of power between a policyholder and an insurer.

Complex Appraisal Attorneys

Although the appraisal process can act as a means for policyholders to have a second look at their insurance claim, the insurance company can still choose to not pay the appraisal award or fail to pay interest on it. In these cases, carriers can be held liable for additional financial damages. At Raizner Slania, we know the many tactics insurance companies use to avoid paying out on valid commercial property claims. While the appraisal process can be daunting, our experienced insurance lawyers can help guide you through a large or complex appraisal. Contact our office today to see how we can assist with your claim.

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