Businesses often carry general liability insurance, which covers property and content damages. Insurance policies are negotiated and are reviewed as an ordinary contract between the parties. In addition, courts are directed to rule in favor of coverage if there are any ambiguities or uncertainties, which helps the insurance policy holder in uncertain cases.
When catastrophe happens, an insurance company is expected to act appropriately. We’ve previously discussed insurance companies’ duties to act in good faith and fair dealing (link to property damage blog). But what happens when an insurance company submits a low offer for your property damage?
Read The Insurance Policy
An insurance policy is a contract (a conventional obligation in Louisiana) and constitutes the law between the insured and its insurer. Most insurance policies contain an appraisal clause. Appraisal is designed to be a way of reaching a settlement when there is a dispute in the value of loss. The following paragraph is an example of an appraisal clause:
“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 and impartial 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 where the “residence premises” is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of 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.”
An appraisal clause presents the insured with an option for disputing the insurance company’s valuation; however, there are certain steps involved in completing the appraisal process.
- Hire a public adjuster to help you properly value your contents claim;
- Submit a written request for the appraisal in accordance with your insurance policy;
- Gather the necessary documentation supporting your reasons for disputing the claim (you can hire a public adjuster for contents or your can hire a general contractor or engineer to appraise your property);
- If appraisal is accepted, the insurance company is bound to hire a third-party independent appraiser to adjust the claim;
- If the insured and insurance company appraiser cannot agree on an amount, the terms of the insurance policy allow the insured to petition the court to appoint an umpire.
While nowadays, most appraisal clauses are not binding on the parties, any disagreement after the appraisal process usually must be resolved with court intervention.
Invoking the appraisal clause
In order to begin the appraisal process, the insured needs to issue a written demand to the insurance company requesting appraisal. We advise sending the demand for appraisal certified mail.
Selecting an Appraiser
The most important quality that an appraiser can have is experience, specifically with the appraisal process. Having a tested expert in the insured’s corner can give it a decided advantage in the appraisal process, while working with an inexperienced appraiser can cause headaches, compound problems, and result in crucial delays.
The Appraisal Process
Invoking the appraisal clause is an essential step to resolving a property damage claim. However, the appraisal clause can cause unnecessary delay.
As we mentioned, it is important to work with an experienced appraiser and invoking and succeeding in the appraisal process can be tough but rewarding.