Insurance adjuster putting his hands over a wooden Home model

What Is Appraisal In The Context of Property Insurance?

Arnett & Arnett, PC  Feb. 9, 2024

Property damage is never a good time. Even when your insurer is easy to work with and provides all the necessary coverage, determining how to get your property back in order can be a difficult process.  

But when you find yourself disagreeing with your insurer over the findings of your home insurance claim, an already-frustrating process becomes a grueling one.  

Examples of this include when:  

  • Your insurer deems your damaged items as worth less than you believe they are. 

  • The estimated cost of repairs is higher than your policy limits. 

  • Your claim is denied altogether. 

This is where appraisal comes in. Let's discuss.  

Understanding Insurance Appraisals

In the realm of property insurance, an appraisal is a process that can be invoked when there's disagreement on the amount of a loss between the policyholder and the insurance company.  

The appraisal process is a contractually binding course of action to settle valuation disputes. It's a clause typically included in most commercial property insurance policies in Arizona.  

This process allows for an impartial assessment of the damage and helps determine the appropriate compensation. 

Role of Appraisers

This may come as a shock, but appraisers are integral to the insurance appraisal process. These professionals are tasked with providing an objective evaluation of the damage to the property and determining the cost to repair or replace it.  

As the policyholder, you and the insurance company each select an independent appraiser. If the selected appraisers cannot agree on the value of the loss, they jointly appoint an umpire who acts as a tiebreaker to resolve the dispute.  

The appraisers' responsibilities include thoroughly inspecting the damage, researching the cost of repairs or replacements, and considering depreciation to arrive at a fair market value.  

These appraisers must be impartial and have no direct stake in the outcome of the appraisal to ensure a fair resolution for the involved parties. They must also be knowledgeable in their field, often having specialized training in property valuation and loss assessment to provide the most accurate appraisal possible. 

The Umpire Selection Process

If the independent appraisers appointed by the policyholder and insurance company are unable to agree on a claim's value, the selection of an umpire becomes crucial. The umpire is an arbitrator who will make a final decision in the event of a stalemate between appraisers. The process of choosing an umpire should be approached with care, as their decision is binding and will significantly impact the settlement. 

To be selected as an umpire, an individual must meet specific criteria that ensure impartiality and expertise. Preferably, they should have experience in the insurance industry, be well-versed in appraisal methodology, and possess a history of making equitable decisions. It is beneficial for both the policyholder and the insurer to agree on the selection of an umpire to preempt potential further disputes or delays. 

In some cases, if the two appraisers cannot agree on an umpire, the decision may be taken to a court of law where a judge will appoint one. This adds a level of judicial oversight to the process, although it also introduces additional delays and expenses. 

To sum up, the umpire plays a pivotal role in the insurance appraisal process by ensuring that when a deadlock occurs, a competent and fair adjudicator is available to resolve the conflict and provide a resolution that is legally enforceable. 

Time Limitations

Arizona policyholders need to be aware that appraisal is generally considered "waived" if not requested within one year of the date of loss. However, waivers are generally disfavored by the Arizona courts, and the burden of proof lies with the party seeking to establish a waiver. It's important to initiate the appraisal process promptly to ensure your rights are protected. 

Limitations of the Appraisal Process

While the appraisal process can provide a second look at your insurance claim, it's also important to note that your insurance company may choose not to pay the appraisal award or fail to pay interest on it.  

In such cases, carriers can be held liable for additional financial damages. Don't let the potential limitations deter you from seeking an appraisal if you believe it to be necessary. Discuss your options with an experienced insurance attorney, who can advise you on the best course of action. 

Enlist Committed Legal Representation

At Arnett & Arnett, PC, we understand the complexities of property insurance claims and the appraisal process. We're committed to assisting our clients throughout Arizona to receive fair and just outcomes from their insurance companies.  

Our experienced team represents residential, commercial, and government entities, committed to securing the full coverage you deserve in a timely manner. If you're facing a dispute with your insurance company, don't fight alone. Let us be your legal shield. Contact us today. 

At Arnett & Arnett, PC, we're proud to serve clients in Chandler, Arizona, and throughout Phoenix, Tucson, Flagstaff, and across the state of Arizona.