Sometimes there is a disagreement over the insurance company’s valuation of an insurance claim. Policyholders often think the only way to settle the dispute is to hire a lawyer. Fortunately, this is not the case. Appraisal is an alternative method.
California Insurance Code requires the appraisal procedure to be contained in every policy containing fire coverage, and it is frequently found in other property and casualty policies. It is critical to understand the appraisal process in the event you sustain a loss to your property that requires an appraisal.
Prior to 2001, the appraisal procedure was mandatory. In 2001, Section 2071 of the Code was amended to narrow the circumstances under which the parties can be compelled to participate in an appraisal. That created uncertainty about what the circumstances are.
In the event of a governmentally declared disaster, an appraisal may be requested by the insurer or the insured, but cannot be compelled. The amended section does not state whether appraisal may be “requested” by either party, but it is ambiguous whether the request triggers mandatory participation in circumstances other than natural disasters. Please note that an appraiser must be selected within 20 days of receipt of a demand letter.
The Code provides that appraisal proceedings are a form of arbitration. Yet, there are distinctions between appraisal and arbitration, which are as follows:
Generally, insurers and insureds select a someone they expect to be sympathetic to their position because compromise frequently occurs in appraisal. When two or three appraisers agree, they must submit a written appraisal award separately stating the cash value and loss to each item. A party can then petition the court to confirm the award. Challenges to an appraisal award must be submitted no later than 100 days after the award has been handed down.
What happens if both sides cannot come to an appraisal agreement? The next step is to proceed to an umpire. Typically, each appraiser submits a list of umpires to the other side and an umpire is selected by mutual agreement. If they cannot agree upon an umpire within 15 days, you may request the choice be made by a judge of a district court in the district where the loss occurred. Umpires are typically engineers, architects or other experts. Once an umpire is selected any offers made during the appraisal process become null and void. Both the insured and insurance company split the cost of umpire fees, which typically range from $500 to $1,000. The use of an umpire is the final step in the process of dispute resolution, as the umpire’s decision is final and binding.
As you can see there are certainly advantages for both sides in the umpire process. There are times when the umpire awards the homeowner nothing because the evidence does not support the claim. There are other times when the homeowner is awarded money for repairs based on the observations. And finally, there are times when the umpire awards the full replacement amount based on the observations. Proceeding all the way to umpire is a risky proposition for all parties involved. There have been times when an umpire has awarded nothing to the homeowner and their appraiser sends along a signed agreement to the insurance company asking for the amount that was offered by the insurance companies’ appraiser prior to the umpire’s decision. It is for that reason that it is imperative that the agreement stipulates that the offer is only valid until an umpire is chosen.
Los ejemplos y la perspectiva de este artículo son la opinión de Claim Ally. Claim Ally no ejerce la abogacía ni brinda asesoramiento legal.
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