Tennessee Insurance Claim Attorneys Discuss Appraisal and Arbitration
Guiding policyholders in the Southeast and Midwest through alternative claim dispute resolution
After damage, loss, or destruction, the insurance claims process can take months, or longer, to resolve – even when the process is amicable. However, if a dispute arises, the process can be delayed for even longer. If a dispute between you and your insurance company goes to trial, the dispute will normally be heard by a judge or a jury. Jury trials are expensive and require significant preparation. It can also take years to get a case to trial. Our attorneys are always ready to go to trial if it’s in your best interests, but sometimes going to court is not always the best option.
At McWherter Scott & Bobbitt, our Tennessee-based insurance dispute lawyers may recommend (depending on the issues in dispute) that insureds consider alternatives to lawsuits. These alternatives can help save costs and the potential for long, drawn-out, appeals. These alternatives are usually faster. In some cases, they are less adversarial.
How the insurance appraisal process works
Insurance appraisal is an alternative dispute resolution method that an insured (or the insurance company) may invoke when there is a disagreement about the amount of the loss. The appraisal review process usually focuses on the amount of your claim. It doesn’t generally involve coverage questions or matters of causation.
Essentially, the appraisal process works to settle disputes about how big the loss is and how much it costs to make necessary repairs. Appraisal can also be used to determine the value of the contents of your home or office that need to be repaired or replaced. These can include furniture, clothing, jewelry, inventory, computer equipment, artwork, and other possessions.
The specific terms of the appraisal review process are normally set forth in the property owner’s insurance policy. Typically, when there is an appraisal review, the insurer and the insured each choose an appraiser. The appraisers, in turn, will choose a third-party individual (sometimes more than one, called a “panel”) called an “umpire” who may determine the amount of the loss in the event that the two appraisers can’t agree between themselves.
Once the appraisers and umpire are selected, each appraiser will prepare an estimate. The insured's appraiser and the insurance carrier's appraiser will then estimate the damage and try to come to an agreement on the amount of your losses. Ideally, the two appraisers arrive at a consensus. Otherwise, the umpire will be called in to prepare an estimate. The appraisers and the umpire are often referred to as the “Appraisal Panel”. The decision of the Appraisal Panel is controlling. The insured and the insurer each pay for their own appraiser’s fee and split the umpire’s fee.
How insurance arbitration differs from appraisal
The insurance arbitration process here in the Southeast and Midwest is quite similar to the appraisal process and generally has the same benefits and disadvantages, without having to go to trial. On the other hand, arbitrations do carry some characteristics of a trial and are thus a bit slower and involved than appraisal.
The key differences between the arbitration process and the appraisal process are:
- Arbitrators vs. Judge/Umpire/Jury – attorneys and/or judges (active or retired) experienced with insurance dispute claims are often utilized as the “decision-maker” instead of umpires, judges or juries.
- In case of a disagreement, arbitrators make the decision as to which side will prevail on certain questions of fact and law.
- The arbitrators can, and often do, hear testimony, review documents, and accept other evidence. Your insurance claim arbitration lawyer will take an active role in presenting your claim and arguing its merits.
- The arbitrators can rule on legal issues and any non-appraisal issues, in addition to the appraisal issues.
Arbitration is typically more costly and timely than an appraisal review – but also less costly and time-consuming than a courtroom trial. It’s also important to note that some insurance policies require mandatory arbitration of insurance disputes.