Everything About the Appraisal Process
Welcome back everyone to another educational article.
Today, we’ll talk about the appraisal process and everything you need to know about it. As you may already know by now, the appraisal is an infamous process that happens after the claim has been settled but the parties do not agree on the sum that should be paid.
For example, a homeowner has suffered a loss and the insurance company sets a sum they’re willing to pay. However, the insured believes it’s not enough and the insurance company is not willing to negotiate further then both parties are in disagreement. After that, either one of them can demand an appraisal.
So, let’s get into the thick of it, shall we?
Beginning the appraisal process
Okay, when both the insured and the insurance company agree to disagree, one of them can demand an appraisal. For example, the insured demands an appraisal and they formally inform the insurance company that they wish to do so.
However, here in Florida, both parties must agree to go to an appraisal. So, if the insurance company denies your request for appraisal, you’re left with no choice but to go to litigation or mediation after that. But let’s assume for the sake of the argument that they do agree to an appraisal.
In this case, both parties choose their own appraiser within 20 days of receiving a formal written request from the other. The two appraisers then proceed to choose an umpire.
If the appraisers cannot agree on an umpire within 15 days, you or the other party can request that the choice be made by the local judge of the court of record and they proceed to appoint a court-appointed umpire.
Once the umpire has been decided upon, the two appraisers will separately set the amount of loss. What that means is that your initial estimate will be the amount of loss and the opposing appraiser will do the same. You will then try to agree on the amount of loss through negotiation.
If both appraisers agree and submit a written agreement on the amount of loss, that will be the final value of the loss, and the claim is settled. If the appraisers cannot agree then the umpire will make their own estimate and the value of the loss.
The umpire needs only one of the appraisers to sign off on the amount and the claim is settled.
A lot of PAs don’t like the appraisal process and some even fear this step, especially PAs who haven’t been in the industry for long. That’s only natural because it can go either way.
If you write an outlandish estimate or you don’t know of any good umpires or you have to deal with a court-appointed umpire, things may not turn out so well.
Still, if you’re careful and you do everything right, you won’t have to worry in most cases. That said, I’ll address some of the most common fears Pas have.
Here it goes.
👉 You won’t be able to get more money out of the claim once the value of the loss has been determined.
👉 Will additional funds are enough depends on your estimate and how the appraisal process proceeds.
👉 Will your client be satisfied depends on the outcome of the appraisal and how much they’re willing to negotiate.
👉 You don’t need to know enough about construction. Trust your team of contractors so that they can help you write an estimate and determine the value of the loss.
Filing an appraisal request
Before you begin, make sure you read the insurance policy to determine if the appraisal clause exists and if both parties have to agree to it, beforehand.
So, when is the best time to file for an appraisal?
You can do so as soon as the check from the insurance company comes in and you and your client are not satisfied with the amount. Moreover, you can file for an appraisal if you can no longer negotiate the amount.
You want $50,000 the insurance company is offering $5,000 and the desk adjuster offers to settle things at $15,000, you can no longer negotiate and you should file for an appraisal. Once you know you have to file an appraisal, here’s how to do it.
👉 Send a certified appraisal request letter.
👉 Attach the same letter in an email and send it.
👉 Offer to settle the claim “pre-appraisal” in your email.
Try to be polite and open and you may not even have to go to appraisal, in the first place.
If you get rejected you can still try to settle the claim through negotiation but in reality, you have to either choose mediation or litigation. In most cases, mediation may be a waste of time, especially if you’re too far apart like in the example above.
Therefore, you might consider explaining the litigation process to your client.
PA vs. Appraiser
As you may already know, there’s a difference between a PA and an Appraiser.
PAs have an interest in the claim because they get paid a percentage or a contingency of the award.
Appraisers, on the other hand, get paid either a flat fee or an hourly rate. Appraisers come in after coverage has been extended and there’s a disagreement on scope or price.
In Florida, like in most other countries, you cannot act as an appraiser if you have a contract as a PA with the client because you’re already too involved.
That means you have to find someone else to act as an appraiser. Anyone with knowledge about construction and claims can act as an appraiser. That can mean another PA, an attorney, a plumber, etc.
Step-by-step appraisal process
Here’s a step-by-step guide to an appraisal process to help you familiarize yourself with what must be done.
👉 Make contact with an opposing appraiser.
👉 Request or exchange an Umpire list and agree upon an Umpire.
👉 Sign the SOU (Selection Of Umpire) Agreement.
👉 Agree on the date of the appraisal inspection.
👉 Inspect the property.
👉 Review the opposing appraiser’s estimate and state your case.
👉 Settle with the appraiser or invoke an Umpire if you have to.
Invoking an Umpire
If you cannot come to an agreement with the opposing adjuster, you’ll have to invoke an Umpire. That means you’ll have scheduled an inspection with the Umpire.
Here’s what you should do.
👉 Schedule an appointment with an Umpire.
👉 Email all of your documentation and estimate to the Umpire.
👉 Have everything printed out and presentable when you meet the Umpire.
👉 Meet the Umpire and make your case.
Tips for a successful appraisal process
Relationship building is of vital importance for not just the appraisal process but for your career as a PA also.
Make sure you network a lot and meet new people you can build relationships with. Get along with people and be nice to everyone. That’s how you build contact lists, such as contractors, Umpires, PAs, and so on.
Furthermore, know how to read an estimate thoroughly so that you can understand what’s involved. Last but not least, expert documentation is your best friend.
With expert documentation, you can back up your reasons for including something in your estimate, which will help you succeed in the appraisal process.
That’s all there is to know about the appraisal process. I hope this information will help you out when you find yourself in the midst of an appraisal.
If you need more information, feel free to check out my website/blog or my YouTube channel.
It’s time to take full control of your claims. Of your business. Of your life.
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