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The typical appraisal clause, found in most insurance policies today, is similar to the following:
"If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state in which the loss is located. The appraisers will separately set the amount of loss. If the appraisers submit an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
Each party will:
Once Appraisal has been invoked by either party, we establish contact with the other party’s appraiser. Then, pursuant to the policy, we attempt to agree upon an umpire. The process of selecting an umpire may be lengthy as it requires careful selection of a competent and disinterested individual. It must be a person qualified to discern and correctly interpret what is being presented without bias or partiality. Occasionally, a letter of disclosure from an umpire candidate is demanded by either appraiser to determine or confirm the umpire candidate’s impartiality. In fact, such a letter is required by law in some states. For example, in California, to comply with California Code of Civil Procedure 1281.9, both the appraisers and umpire must provide both parties (insurer and insured) with a full disclosure letter. This Declaration of Disclosure letter from the appraisers and umpire individually, must contain all information necessary to disclose any relationship he/she has with either party.
If the two (2) appraisers cannot agree upon an umpire within the stated time (typically 15 days) either party may petition a judge in a court of record in the state of the loss to choose from their candidate(s). Our legal team is adept in this area, and we have successfully had umpires court-appointed for insurance companies, business owners and homeowners. Choosing the most competent and disinterested umpire leads to a successful and fair settlement for both parties (insurer and insured).
Accuracy in the Appraisal Process is also reliant upon detailing, calculating and outlining the damages diligently. These damages could be physical in nature (structure or personal property), or economic, resultant from an interruption in business revenue. It may also become necessary to temporarily relocate if a structure becomes uninhabitable. The facts of a loss and extent of damage(s), though subjective at times, should be definitive and articulated effectively.
It is important to discern whether something is repairable, or if it is necessary to replace. We implement the effective use of technology, including a national zip code-based price structure to achieve the most accurate amount of loss. Our coast-to-coast resources of architectural and engineering firms, general contractors and certified indoor environmentalists can produce specialized protocols for complex commercial and residential structure rebuilding, and abatement (when applicable). We are also adept at the implementation of the International Building Code, State and Local Building Codes, and Local Law and Ordinance compliance.
Another factor that leads to a successful and fair settlement is implementing case-law that has been established in the state of the loss (or neighboring states). In addition, settlement conditions and repair projects must be in compliance with state-governed insurance code(s). The anatomy of the Appraisal Process is still in its early stages in most states.
For many of these states, the Code of Civil Procedure governs the Appraisal Process. Intrust Claim Servicing, Inc. has the experience and database in place with our appraisers, attorneys and veteran umpire experts across the country to ensure the settlement is in compliance with laws of the state of the loss location. It is an important and useful position for each case as the Appraisal Clause, though it is gaining popularity, is still often under-utilized throughout the industry. This is one of the reasons why we emphasize having an “experienced and competent appraiser” handling all aspects of the insurance appraisal.
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