Before you agree to or invoke an insurance appraisal, don't... NOT without making sure the insured's position includes everything it should and nothing it shouldn't.

The days of one paragraph appraisals are no longer always the case. There are appraisal clauses that may make invoking or agreeing to appraisal a mistake, unless you know the traps and weaknesses and can use them to create a memorandum that levels the appraisal process, making it more fair and less onerous.

We would always advise every insured, every contractor, every attorney to thoroughly read the appraisal clause when considering invoking or agreeing to an appraisal. Make sure the insured's position is well prepared prior to invoking or agreeing to appraisal. Because some appraisal clauses are a detriment and a disadvantage to some insureds, and some claims, it is extremely important that the appraisal be vetted first.

Some policies dictate that the insured determine exactly what is being disputed, including naming all components and parts:

Formers/Foremost: The appraisers shall determine the incurred property damage, If any, to each of the component parts of that property for which you have claimed loss, and the actual cash value of the incurred property damage, as of date of the loss. In

determining the actual cash value of the incurred property damage, the appraisers shall only use reasonable costs of materials of like kind and quality unless the policy expressly provides otherwise.

The appraisal shall separately state and itemize the following for each individual component part of the incurred property damage:

i. a description of each component part of the property;

ii. a description of the distinct and demonstrable physical injury to or destruction of each component part, if any, without reference to

what caused the damage;

iii. a description of the reasonably necessary repairs or replacements for each component part of property;

iv. the estimated costs of the reasonably necessary repairs or replacement(s) to each component part of property;

v. the estimated amount of proper depreciation and/or obsolescence to each component part of property; and

vi. the actual cash value of the incurred property damage.

Evidence of the reasonableness of the costs, and evidence that the materials are of like kind and quality, if the policy loss settlement requires like kind and quality settlement, shall also be included with the appraisal.

Don't assume your appraiser is ready for these policies and the appraisal processes they mandate.

If the appraiser believes they can treat every appraisal the same, they are living in the past. We have WITNESSED appraisers representing insureds behave as though they don't have to adhere to these appraisal clauses.

The appraisal clause above can be ignored and could result in an acceptable appraisal award, though, if the carrier doesn't agree, they will likely be looking into whether the appraisers actually stayed within their authority and adhered to the appraisal clause details.

This is not your daddy's Oldsmobile!

Besides vetting the claim, the insured's position, some clauses may strip the appraiser of making determinations though are allow the insured to make those determinations. Some clauses may impede the appraisers from normal appraisal protocols.

In this case, if you make sure the insured's position includes component descriptions, if they are damaged or affected and how, why the method estimated is reasonable for each component, and the costs to each component along with the evidence of reasonableness will not only save the appraiser time that will be billed to the insured, it will help to clarify the insured's position and make it easier for it to be deemed reasonable by the insured's appraiser and help the insured's appraiser present it to the carrier appraiser and if necessary the umpire.

Some carriers have modified their appraisal clause resulting is a much more complicated appraisal process that if not followed exactly can subject the award to a legal battle to Overturn OR Vacate it.