Homeowners Insurance Appraisals

Don’t look now, but insurance companies are moving disputes over homeowners’ policy claims into a potentially more expensive arena. Instead of having your day in court, you may end up with your hands tied and your wallet emptier by what’s called an appraisal.

The appraisal is not that evaluation of a home’s value for mortgage purposes; it’s a form of arbitration in which you hire an appraiser out of your own pocket to prove what you claimed under the rights set forth in your homeowners policy, should be paid. The insurance company also hires an appraiser of the damages and, if the two sides can’t agree, they split the difference and that’s how much money you receive, regardless of the actual amount it takes to repair your home properly.

This amount is binding, which means you can’t challenge the dollar amount in court. You can sue only if you can show that the process was flawed.

Insurers love to write appraisal requirements into your policy. Citizens Property Insurance Corp. used it more than 10,000 times between December 2017 and July 2018, according to an August 2018 article in the South Florida Sun-Sentinel.

An appraisal is less expensive and time-consuming than a lawsuit, saving insurance companies money. But it’s costlier for homeowners or third parties to make repairs because they must hire outside experts to support their claims.

That may mean you’ll have to accept the insurance company’s first offer because commissioning a review of repair expenses would be more expensive than the additional money would receive if your estimate prevails. The only reason you might go to appraisal is that the two sides’ numbers are so close that getting paid sooner without additional expense makes financial sense.

Now’s the time to pull your policy out of the file cabinet or safety deposit box and find the section on disputes. Does the word “appraisal” appear there? If so, do both sides have to agree to the process or can the insurer invoke it on its own? What must you do, such as hiring someone to estimate expenses?

Know that if you’ve assigned your policy benefits to the company repairing your home, that firm, not you, will have to pay for the appraiser in order to resolve money differences with the insurer. Because you won’t be receiving any repair-related funds, you’re not on the hook for the appraisal.

If the policy doesn’t mention appraisal, how are disputes resolved? Insurance Litigation Group, LLC (ILG) will go to court for you to seek the full amount needed to repair your home. We are a boutique law firm of experienced insurance litigation attorneys and legal assistants whose fees and most of our costs are paid by the insurance company.