Most people are familiar with the word appraisal. Homes, Jewelry, Antiques, and many other things come to mind when you hear the word. So how is an Insurance Appraisal different and how does it work? There are a few key differences when it comes to this type of appraisal.

Invoking An Insurance Appraisal

The first key difference is that an insurance appraisal is done after a value has been determined from damages or loss that are covered under an insurance policy. When one party, either the Insurance company or the insured, disagrees with the value given to the loss they can invoke, or request, an insurance appraisal.

Different Types of Value

Most appraisals are based on the current value of that item. This is often referred to as the Actual Cash Value. Items like collectibles, Jewelry, and precious stones will tend to gain value over time. Things like appliances, Cars, and furniture tend to lose value over time which is called depreciation. In the insurance industry you can have an Actual Cash Value Policy, which pays what the items are currently worth plus depreciation, or a Replacement Value Policy, which pays what it would take to replace the items at today’s cost. So the payout from an insurance loss can vary greatly based on what type of policy you hold.

Independent Assessments

The importance of Insurance Appraisal comes from the fact that regardless of who invokes the Appraisal clause, both sides much choose an independent, competent appraiser. These individuals should be well educated in their field so they can sort out differences like values, Actual Cash Value versus Replacement Cost, and other such differences. In the event that they are unable to come to an agreement they will have selected an Umpire. An Umpire is an impartial third party who also has expertise in this field to render a binding decision. Here are the steps for review:

  • Loss occurs on insured property
  • Initial assessment occurs
  • One or both parties disagree with assessment
  • Either the Insurance Company or Insured invokes Appraisal Clause
  • Each side chooses impartial insurance appraiser
  • Insurance appraiser select an umpire
  • If the appraisers are unable to come to a decision then Umpire makes binding decision

These are the basic principles of the Insurance Appraisal. It is a cost effective route compared to going through Legal litigation and courts. It generally takes much less time as well. It is designed to give a fair and impartial decision on the value of a loss and that is a good thing for all involved. Assurance Advocacy Group (AAG) can help you make sure that things go smoothly. We are the West Coast’s most trusted appraisal and umpiring firm and we can help. Contact us for more information on the insurance appraisal and how we can help your company get what is fair.