Independent Appraiser and Insurance Appraisal Protects Policyholders

Almost all insurance policies have an appraisal clause that allows the parties of the insurance contract to resolve disputes that may arise during a claim. Appraisal is for the “amount of loss,” only. This is the amount of monies it will cost to fully complete the repairs caused by the claim damages. For instance; policyholders could be forced to use an independent appraiser to settle their differences with the insurance company, using the appraisal process to protect their interests.

In a recent Texas case, JM Walker, LLC v. Acadia Insurance Company, reveals how an independent appraiser and the appraisal process protected a policyholder from mistakes made by the insurance company. Mistakes that could have cost the policyholder “hundreds of thousands of dollars!” Each situation can be a bit different simply by how the appraisal clause is worded in the policy, by the type of damage that occurred, and by all the facts pertaining to the loss.

The insured, JM Walker insured five buildings in North Richland Hills, Texas. A severe hailstorm damaged the roofs on all five buildings. As any insured would, Mr. Walker submitted the claim to Acadia, the insurance company who insured the buildings. The adjuster from Acadia denied payment on the claim at first. The adjuster determined that the roofs had minimal damage from the hail and did not require full replacement. This analysis resulted in non-payment because the adjuster’s estimate was under the $5,000 deductible.

It’s no surprises that Walker did not agree with the assessment of the adjuster. The two parties could not reach an agreement, so Acadia invoked the appraisal clause. Mr. Walker submitted the matter to a district court by filing a lawsuit. However, the Judge got both sides to continue with the appraisal process. It is not uncommon that courts will rule this way, as most insurance policies will require that all the policy provisions be exhausted before either party can litigate against the other.

The appraisal clause states that each party will hire an independent appraiser. The two appraisers will then choose an umpire. If the two independent appraisers cannot agree on the amount to repair the damages they will submit their differences to the umpire. The umpire in this appraisal agreed that the roofs required replacement and produced an award favoring Mr. Walker in the amount of $423,053.96. Appraisal awards are binding. In turn, Acadia had to pay the full amount of the award. (I should remind you that Acadia’s adjuster first determined the loss amount to be $0 because they believed the damages were below the $5,000 deductible.)

JM Walker filed an appeal in the United States Fifth Circuit. Walker believed he was entitled to more insurance proceeds for his damages, plus was seeking additional monies for which he believed was “bad faith” conduct by Acadia and their poor handling of the claim.

The Court stated that under Texas law, “appraisal awards made pursuant to the provisions of an insurance contract are binding and enforceable, and every reasonable presumption will be indulged to sustain an appraisal award.” The Court also stated that an otherwise binding appraisal may only be disregarded in three situations:

(1) when the award was made without authority; (2) when the award was made as a result of fraud, accident, or mistake; or (3) when the award was not in compliance with the requirements of the policy.”

Mr. Walker argued on all three points and was dismissed by the court on all three. This appraisal is a good resource of how the courts respect the conditions of the appraisal process in Texas. In my opinion, the Independent Appraiser and the insurance appraisal process protected the policyholder. The work by the Independent Appraiser and the Appraisal Process was responsible for Walker receiving $418,053.96 over what the insurance company was willing to pay on the claim.

In the event that you find yourself in an insurance claim dispute, you should highly consider calling an Independent Appraiser for assistance in the insurance appraisal process. Insurance Appraisal Services is all we do. Feel free to call Insurance Claims Group, Inc. at 919-669-9111 to have all your insurance appraisal questions answered.

(C) Joe Brennan is President and owner/operator of Insurance Claims Group, Inc., a national independent adjusting, appraisal, and umpiring firm. We will answer your claim questions FREE – Ph: 919-669-9111 . Get Independent Appraiser Help, by visiting http://www.insuranceclaimsgroup.com or http://www.fireinsuranceclaims.net