What is Insurance Appraisal & Umpire?

Appraisal is another form of Alternative Dispute Resolution (ADR) regarding insurance valuation claims, as a provision in the lost settlement section within the Insurance Services Office form, such as an HO3 policy. When there is a disagreement over the valuation of an insurance claim between the insured and the carrier, this method of ADR can be used to seek settlement between the parties.

The lost settlement section of the policy may say; if the insured and the carrier fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, then either party can make a written demand for appraisal. Demand for appraisal will allow each party to select a competent and independent appraiser to represent them. The responding party will notify the other party within 20 days upon receipt of the written demand.

If the appraisers fail to agree, they will then submit their differences to an umpire. Both appraisers will then choose an umpire, however, if they cannot agree upon an umpire within 15 days, either party can make a request that the choice can be made by a  judge of a district court of a judicial district where the loss occurred.

What are the pros and cons of an appraisal?

Pros
 They are cheaper than a lawsuit
 It is informal
 The resolution is faster than litigation
 The cost is shared between each party and the umpire fee is split.
 It is fair and beneficial for both sides.
 Professional appraisers and umpires can lead to a reasonable award
Cons
 Appraisals don’t resolve all disputes
 Some parties don’t know about the appraisal process
 Umpires could just split the difference if they don’t fully understand
 The award is final and binding.
 There is no firm procedure

Clinton J. Ford M.S…

Clinton J Ford M.S… is an approved Appraiser and Umpire by the Insurance Appraisal & Umpire Association, who has many years experience in the insurance industry.