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How To Navigate The Little-known Insurance Appraisal Process

The Insurance Appraisal Process

Nobody loves going through an insurance appraisal. But, occasionally an insurance company or their adjusters may be unwilling to approve a legitimate claim or refuse to pay the present day, fair market value on a reasonable estimate from a general contractor. When this happens in the state of Texas, the insured or policyholder typically has the right to invoke or request the appraisal process. At Compassion Construction we do our absolute best to help our clients get their project fully funded without having to go through appraisal. However sometimes appraisal is the best option for settling disputes over the insurance company’s liability for restoring your property.

The “Appraisal Provision”, in most home insurance policies, allows the policyholder to hire an independent appraiser (like Compassion Construction) to determine the damages or the value of their damages. In turn, the insurance company will also hire their own independent appraiser. These two appraisers will then get together and select an umpire. Compassion Construction can also act as an Umpire but not both for the same client. The umpire is an arbitrator, or what you might call the judge. If a disagreement between the two appraisers arises, they can present their differences to the umpire, who will make a ruling. These three individuals are known as the Appraisal Panel. The object of the Panel is to determine The Amount of Loss. The Amount of Loss is the total dollar amount needed to return the damaged property (your roof, gutters, fence, siding, windows and/or any other damaged property) back to its original condition, either by repair or replacement.

Once the Appraisal Panel is set, the policyholder’s chosen appraiser and the insurance company’s chosen appraiser will review the documents, proof of damages, estimates, and differences between them. The two independent appraisers will try to discuss and resolve the differences in damage and in cost. The two appraisers will discuss their reasons for their position on what does and does not need to be covered, and try to come to an agreement. Sometimes issues arise where the two independent appraisers can’t agree on certain line items. In this event, the two appraisers will submit their difference to the chosen umpire. The three will discuss the issues and try to reach an agreed settlement of the differences.

As stated above, the settlement or final number is called The Amount of Loss. The final amount is known as the Appraisal Award. Once any TWO of the three individuals on the Appraisal Panel sign the award the dispute is irreversibly over! The amount on the Award is binding and is paid by the insurance company, to the policyholder. This amount will be due and payable to the contractor as it reflects the final negotiated total amount for the roof replacement.

It should be noted that there is no recourse against an Insured for using the appraisal process.That would be unethical and illegal on the part of the insurance company. They are not allowed to raise deductibles or premiums or cancel your policy for invoking the appraisal process.

The insurance appraisal process is a time consuming process and should not be invoked until after your insurance carrier has made it clear that they are unwilling to negotiate. Most insurance carriers attempt to be fair in their settlements, so appraisals are not usually necessary. Compassion Construction is a full service general contractor and can help you through the entire insurance claim process from filing the claim to meeting with the assigned adjuster, creating a scope of necessary repairs, and to negotiating any missing repairs on your insurance company’s estimate.

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