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What if, after you’ve done all of this, you and your adjuster/insurance company are still at odds over the value of your property? Now is the time to implement valuation clause in your insurance policy. The valuation clause is found in all insurance policies, and was designed to establish a process to allow disputed amounts to be resolved by unwilling parties. An appraisal clause can be found in every homeowner’s policy, in every policy covering commercial buildings, in all business policies, as well as in every renter’s policy…even in automobile policies.
The valuation clause is usually found under the heading “Conditions” and/or “What to do after a loss” in the policy.
Don’t confuse the appraisal process with mediation. The Evaluation Clause does not bind either party to its findings. In arbitration, the findings of the arbitrator are usually binding on both the parties.
Valuation clause means the method of determining the disputed values. Appraisal cannot be used to determine what is covered. This is for the court of law to decide. If you have a dispute with the company about whether or not something is covered, you will need to file a lawsuit against your insurer to get that determination.
Here’s a really important tip!!! You don’t have to wait until you have a hopeless impasse with the adjuster or insurance company to invoke the appraisal clause. The appraisal process is used more frequently by insurers, who have a greater understanding of the terms and conditions of their policies. But you, the insured or the policyholder can do it at any time.
I am not suggesting that you become uncooperative. But occasionally, I talk to people who are having real difficulties with their adjuster or insurance company. Taking a valuation claim sometimes stops all the drama.
In my experience as both an appraiser and an umpire, I have found that disputes can be resolved more quickly by valuation than by litigation. The cost of the assessment process is also much lower than the cost of litigation.
Here is the valuation clause in my homeowner’s insurance policy:
“If you and we fail to agree on the amount of the damages, which may be either
In the event of a demand for an assessment of damages, each party shall choose
a Competent Valuer within 20 days from the receipt of the written request
from the other The two assessors will select an umpire. if they
cannot agree on an umpire within 15 days, you or we may request
The election must be made by a judge of the court of record in the state
Where the “residence complex” is located. the appraiser will
Separately determine the amount of damage. If the appraiser submits
Settlement for us, the amount agreed upon will be the amount of damages.
If they do not agree, they shall submit their differences to the umpire.
The amount of loss will be determined by the decision accepted by any two.
Each party shall:
One. pay your own appraiser, and
B. Equally bear the valuation and other expenses of the umpire.”
Each party appoints an independent, disinterested appraiser. In past experience, I have seen the insured or policyholder attempt to hire a public adjuster who is handling their claim as an appraiser. This should never be done, because that PA is not an indifferent party.
Appraisers independently appraise the damage. Appraisers can still negotiate and reach an agreed amount of damages. But, if they cannot agree, they work together to choose a mutually acceptable umpire. If the two assessors cannot agree on the selection of an umpire, either side may appeal to a local court for the appointment of someone to serve in that capacity.
An umpire must also be a disinterested party, and must be impartial, having good moral character and a good reputation. He should also be ready to listen. No umpire should be selected who has any financial interest in the outcome of the evaluation. No other consideration other than the hourly rate of compensation for the umpire is acceptable.
Once an umpire has been selected, the appraisers each submit their assessment of the loss. Often, this involves informal testimony from the parties involved in the claim. To help the umpire gain a more complete understanding of the details of the loss, the appraiser and umpire sometimes meet at the site of the loss and review the details of the loss. The umpire will subsequently provide a written decision to both the parties. If any two parties agree on the amount of damages, then that amount becomes the claim amount. However, if one of the parties does not agree, the matter may be referred to legal counsel for litigation.
Question: Can the insured or the insurer reject the other parties’ choice of appraiser?
Answer: In 2005, the New York Department of Insurance issued a ruling on this question as follows:
“Whether an appraiser appointed by either party is competent and disinterested (or “independent”) is a question of fact for a jury and is outside this Department’s determination.
One more tip!! Note that the clause has very specific time limits. Make sure that you choose your appraiser and inform the adjuster within the time frame in your policy. The time limit for the selection of umpires for both assessors starts from the day both sides select their assessors.
Check very carefully to see if the insurance company and/or adjuster selects their appraiser within that time frame. If they do not do so, they have violated the terms and conditions of their policy. You can file a complaint of improper claims practice violation with your state’s department of insurance.
My recommendation, in the event of an evaluation, is to call a claims advisor. You might also consider contacting a public adjustment company in your area. Claims consultants or PAs know insurance policies, know appraisal clauses, and know property values. Claims Consultant or PA are the right choice to help you prove the property values of your claim.
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