Appraisals are a long running method used to settle insurance disputes by determining the amount of loss for a claim. They can be cost effective and beneficial to moving the process along. One note of caution before moving through the appraisal process is ensuring that the appraisal will be enforceable against the insurer. Some newer policies have added language removing the teeth of the appraisal process by allowing one side to disagree with the result and not following through with the appraisal decision.
Regardless, the appraisal process can be invoked by either party. Each side can choose their own appraiser. The appraisers can then either mutually agree upon an umpire or they can file a petition with a court to appoint an umpire.
The following is an example of a typical appraisal provision for a residential insurance policy:
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.
Each party will:
1. Pay its own appraiser; and
2. Bear the other expenses of the appraisal and
The emphasis is added to show an ambiguous sentence. In general, it allows either-party to file ex parte, meaning without notification to the other side, for a judge to select an umpire. Courts have upheld this idea per a case issued by United States District Judge Sam R. Cumming in Civil Action No.1:11-CV-217-C in a case styled Janice B Schwartz, et al v. Century SuretyCompany. Here, the judge held that the policy language allowed for the ex parte petition for an umpire. Furthermore, the judge found that even if the language were to be held ambiguous, since the insurer drafted the language, any ambiguities should beheld to benefit the insured. In other words, the insured should retain the right to file for an umpire without any notice given to the insurer.
How do you file for a court to make an appointment for an umpire? It varies by jurisdiction and judge. The best plan is to allow counsel to assist with navigating any local requirements and processes.
Do you have an appraisal that needs help selecting an umpire? Give our firm a call to see how we can help expedite that process and put the insured in the best possible position for the appraisal process.