Insurance claim disputes are common, as questions surrounding property damage, property repairs, total cost of repairs, and whether all or part of your claim is covered may be the subject of disagreement between you and your insurer.
When it comes to the technical and legal dynamics involved in claims disputes, you are often on an uneven playing field with your insurance company.
The best path to resolve a claim dispute depends on your individual situation, and the different avenues of resolution have varying pros and cons. This is when having a qualified, professional public insurance adjuster in your corner is essential.
Explaining Arbitration, Mediation & Appraisal
Here are the three different options your policy may provide when you have an insurance claim dispute: Arbitration, Mediation, and Appraisal.
A need for arbitration has started appearing more regularly in some property insurance contracts. But what precisely is arbitration and how is it different from litigation or a trial?
Alternative Dispute Resolution (ADR) is the name given to arbitration. This is where all parties consent to abide by and respect the arbitrator's ruling. A person or authority appointed as the arbitrator, who in actuality has the same authority as a judge but is only responsible for the specific dispute at hand, is in control of this process. The goal of arbitration is for the arbitrator to resolve disputes in the most just manner possible after hearing from all sides and analyzing their respective arguments.
Arbitration is not necessarily intended to reach a compromise between the parties, but it can be a faster and more cost-effective way of settling a dispute, as it allows you to avoid a trial.
The most common method of resolving claim disputes is mediation, whether it is voluntary or ordered by the court. Mediation is a way to resolve a claims dispute between the policyholder and the insurance company where a neutral third-party mediator acts to encourage and assist in the resolution of a dispute.
The insured and insurer participate in the decision-making process during mediation, but not during arbitration, where they can simply state their claims. A mediator lacks the authority to make a ruling and assign damages, unlike an arbitrator.
Although the nature of mediation is much more informal and the mediator typically encourages the parties to reach a solution on their own, he/she does not pass any orders.
When a compromise is reached, the parties draft a settlement agreement. The only grounds for challenging the final settlement in court are fraud and deception.
One advantage of mediation is that it may be quicker and less expensive than going to trial. A negative element of mediation may be that cases sometimes settle in mediation for less than their true value or do not settle at all.
The appraisal process, which is a stipulation outlined in most commercial and residential insurance policies, can be used as an alternative dispute resolution mechanism to avoid litigation or to resolve portions of an insurance claim. Since both appraisal and arbitration are alternative conflict resolution procedures that enable issues to be addressed without the need for litigation, they do share some similarities.
The provision for appraisals can typically be found under the Loss Settlement section of your policy. When the insurance company and policyholder cannot agree on the amount of loss, it is an Alternative Dispute Resolution that can settle disputes in rather than filing a lawsuit.
The majority of property insurance policies have language that allows "appraisals" to be used to settle disagreements on the scope and value of a loss. A real estate or art appraisal is not the same as an insurance appraisal. The extent and severity of a loss (what was damaged and how badly), as well as the cost of the loss (how much repairs should cost), can be determined by an insurance appraisal.
Most appraisal clauses within an insurance policy provides that any party may request an appraisal in writing if the insurer and insured cannot agree on the amount of the loss. Each party is responsible for hiring their own appraiser. Then the two appraisers will select an impartial individual who will act as an umpire if they cannot agree on the settlement of the loss. In that event, the umpire will be called in to assess the loss and settle the claim.
Looking For a Licensed Public Insurance Adjuster or Appraiser to Guide You Through the Claims Process?
A Public Adjuster or Appraiser acts as your advocate and will make sure you receive a proper settlement of your claim.
At Reliant Insurance Adjusters, we are dedicated to our clients, and are here to alleviate any stress from your claim. We have the expertise and experience needed to navigate this complicated process. Contact us today (561) 288-6434 for any questions or assistance with your insurance claim.