What is an Appraisal?
Your commercial property insurance policy contains an important tool to help you
resolve disputes with your insurance company: the appraisal clause. A typical
commercial appraisal clause reads as follows:
If we and you disagree on the value of the property or the
amount of loss, either may make written demand for
appraisal of the loss. In this event, each party will select a
competent and impartial appraiser. The two appraisers will
select an umpire. If they cannot agree, either may request
that selection be made by a judge of a court having
jurisdiction. The appraisers will state separately the value of
the property and amount of loss. If they fail to agree, they will
submit their differences to the umpire. A decision agreed to
by any two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire
equally.
If there is an appraisal, we will still retain our right to deny
the claim.
The appraisal process can be a quicker and potentially less expensive way of resolving
a dispute on the amount of the loss than litigation. As a result, if your dispute is only
about the amount of the loss under the policy, then appraisal may be a valuable tool.
However, the appraisal process does not determine coverage under the policy. As a
result, if your insurer has denied coverage for the loss, then appraisal cannot decide this
issue and may not be helpful.
What Should You Do Before Seeking Appraisal?
Before you can invoke the appraisal provision of your insurance policy, there must be
legitimate disagreement about the amount to be paid and you must have to have given
the insurer a reasonably opportunity to investigate the loss. As one Florida Court has
stated, “Until the insurer has a reasonable opportunity to investigate and adjust the
claim, there is no “disagreement” (for purposes of appraisal) regarding the value of the
property or the amount of loss to be appraised.” See Florida Ins. Guar. Ass’n v. Santos,
148 So. 3d 837, 839 (Fla. Ct. App. 2014). As a result, you must cooperate with the
insurer and let them see and evaluate the damaged property, answer any reasonable
requests for information and otherwise make an honest attempt to reach an agreement
with them on the amount of the loss before requesting appraisal. See Citizens Property
Ins. Corp. v. Galeria Villas Condominium Ass’n, 48 So. 3d 188, 191 (Fla. Ct. App. 2010).
It can he helpful to review the pages of your policy that discuss your duties in the event
of a loss to make sure that you are complying with your policy.
Documenting your Loss
After you have suffered a loss, you will want to obtain a detailed estimate to repair or
replace your property from a licensed reputable commercial contractor with experience
working with insurers. Also, make sure to take extensive pictures or have your
contractor take extensive pictures. Contractors who have experience working on
insurance claims often will do this as a matter of course.
You should then submit the estimate to your insurer. When you receive an estimate from
your insurance company, you should review it and provide it to your contractor for their
review. Ask your contractor to review the estimate and make any necessary corrections
to the contractor’s estimate and point out any deficiencies to the insurer. Then, send
your insurance company specific notice of the areas in which their estimate is deficient
to allow the insurance company an opportunity to correct them. Answer any reasonable
questions that the insurer has regarding the property, your estimate, and the
differences.
If the insurer delays or it becomes clear that you have a disagreement on what the
insurer will pay, contact an attorney immediately to commence appraisal. We help
businesses with commercial insurance claims. Please contact us if you need help or
have any questions. Next week’s post fill focus on choosing the right appraiser.