The insurance appraisal process is a critical tool for resolving disputes over property insurance claims. One of the most important elements of this process is the insurance appraisal award, a binding decision that establishes the value of the loss. Ensuring the accuracy, fairness, and completeness of an appraisal award is crucial to preventing disputes and ensuring that all parties receive a just outcome. Below are best practices for preparing an insurance appraisal award.
Key Components of an Insurance Appraisal Award
An insurance appraisal award should include the following essential information:
Basic Claim Information:
Policyholder’s name and address
Insurance company’s name and address
Date of loss
Policy number
Claim number
Cause of loss (if applicable)
Appraisal Panel Members:
Name of the policyholder’s appraiser
Name of the insurance carrier’s appraiser
Name of the umpire
Valuation and Coverage Details:
Actual cash value (ACV)
Replacement cost value (RCV)
Identification of items appraised (e.g., Main Dwelling Roof, Coverage A - Dwelling, etc.)
Signature Areas:
Appraisers’ signatures
Umpire’s signature
Clarifying Statements in an Appraisal Award
Most appraisal awards include a general statement clarifying the scope of the award. A commonly used statement reads:
“The above award is a comprehensive award. The application of any applicable advance payments, deductibles, or any other terms and conditions of the insurance policy are not applied to this award.”
This statement ensures that the appraisal panel remains focused solely on the valuation of the loss and does not attempt to apply policy provisions, which could lead to delays or disputes.
Additionally, an appraisal award often includes a statement reinforcing the panel’s duty to act fairly and impartially. This protects the integrity of the process and ensures that both parties are treated equitably.
Avoiding Biased or Problematic Language
Appraisal panels typically draft their own awards, and the language used can sometimes inadvertently favor one party over another. To maintain neutrality:
Carefully review all award language to ensure fairness.
Remove any language that could be interpreted as influencing policy interpretation.
Ensure that award documents do not introduce coverage determinations beyond the panel’s authority.
Reviewing Associated Estimates & Documentation
One of the most overlooked but crucial steps in finalizing an appraisal award is reviewing all associated documentation, including any estimates referenced in the award. A real-world example illustrates this point:
An appraisal award I once signed had an accompanying estimate spanning 137 pages. Within this document, two line items contained F9 notes that, in my opinion, implied a specific coverage interpretation favoring the insurance company. The inclusion of these notes could have justified a denial of approximately $200,000 in payments. By identifying and removing these F9 notes, the award remained fair and prevented unnecessary disputes.
This underscores why appraisers must thoroughly review all pages of referenced estimates and other documents to ensure unintended consequences do not arise from overlooked details.
Final Thoughts: Due Diligence is Key
When creating an insurance appraisal award, appraisers must exercise due diligence in reviewing:
All language used in the award
Any clarifications or explanatory statements
Any additional documentation referenced in the award
By following these best practices, appraisal panels can create awards that are fair, impartial, and free from ambiguities that could lead to further disputes. Taking the time to properly review and construct an award ensures that the appraisal process remains a reliable and effective tool for dispute resolution in insurance claims.
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