Texas Insurance Claim Appraisers & How The Appraisal Clause Process Works

A Texas property insurance appraiser is a professional who steps in when a policyholder and an insurance company cannot agree on a property damage claim value.

You and your insurance company might disagree about the amount of loss or the scope of damages during a claim settlement – such as the total cost to repair storm damage to your home, for example. You may disagree with your insurance company and think that their estimate for repairs is too low.

Disagreements and negotiations are a normal part of any property damage insurance claim. But when your insurance company refuses to negotiate on the amount of loss, you have the option to settle your claim by invoking an appraisal clause in your insurance policy. In doing so, both you and your insurance company need to hire your own appraiser to determine the value of the loss.

The goal of the appraisers is to make a determination as to a fair price for your claim, or what your insurance claim is worth. This undoubtedly means that hiring the right appraiser for this process is critical.

Invoking an Appraisal Clause

Every property insurance policy in Texas has an appraisal clause.

The appraisal language in a standard policy typically reads as follows: 

Appraisal. If you (property owner) and we (insurance carrier) fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent, appraiser and notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actual cash value and loss to each item.

Each party – including you and your insurance company – is required to hire an appraiser. Each party must pay for its own appraiser. But, if they fail to reach a mutual decision and it has to go to an “umpire”, both parties must also split the expenses of the appraisal and umpire equally.

What is an Appraisal Umpire?

After both you and your insurance company hire an appraiser, both appraisers will work together to pick an appraisal umpire. Usually, a retired engineer, contractor, judge or lawyer is hired as a third-party fact-finder; A qualified umpire is anyone licensed by the state of Texas who is capable of giving an impartial valuation based on his or her expertise in the field.  The appraisal umpire is a competent, disinterested, and impartial individual who may render a final, binding decision if the two appraisers cannot reach an agreement.

If the two appraisers cannot reach an agreement on the amount of the loss, then the decision will go to the appraisal umpire. 

What Does a Property Insurance Appraiser Do?

After hiring an insurance appraiser, the appraiser will get to work. Some of the core duties performed by an insurance appraiser during a public appraisal include:

Investigate and evaluate your insurance claim

Determine whether your insurance policy covers the loss claimed

Decide the appropriate amount the insurance company should pay for the loss

Ensure that the claim is not fraudulent

Contact associates, coworkers, doctors, employers, contractors, the police, and others to get additional information about a questionable claim

Consult with lawyers on claims if needed

Maintain claims files, including a record of settled claims and an inventory of claims requiring detailed analysis

Negotiate a final settlement with the appraiser hired by your insurance company

If a disagreement cannot be reached, pass the case off to the appraisal umpire for a final verdict

Overall, an appraiser’s goal is to investigate, evaluate, and provide valuations on property damage to help settle insurance claims.

Some specialize in a specific area of insurance – like a commercial, business, and residential insurance. Others specialize in a specific type of damage – like hail, roof, wind, flood, or hurricane damage.

 
Pros and Cons of Insurance Appraisal

An insurance appraisal is a crucial part of the insurance industry. When two sides cannot reach an agreement on the value of a claim, then the policyholder may invoke the appraisal clause.

Pros

•             Insurance appraisal could be the best way to resolve a significant claim dispute with your insurance company.

•             You can add significant value to your claim without the added time and expense of prolonged litigation.

•             The terms of invoking an appraisal are already written into your insurance contract. It’s a well-established process used by policyholders across Texas every year.

•             You can earn every penny legally owed to you by your insurance company for your claim.

•             You can prevent an insurance company from dragging its feet, denying your claim for no good reason, or engaging in other problematic tactics.

Cons

•             The disputed difference needs to be significant for the claims process to be worthwhile. If you and your insurance company disagree about $5,000, for example, then the appraisal fees alone could take up any proceeds even if the appraisers rule in your favor.

•             There are no guarantees about the outcome of an appraisal. Once a decision has been reached – either by the appraisers or the umpire – that decision is final. There are limited ways to challenge this final decision, change the award, or receive further compensation.

•             Some appraisals can take a long time. You may spend months waiting for the other side to choose an appraiser, perform a thorough appraisal, negotiate, and then finally receive a decision from the appraisal umpire.

•             It can be difficult to find impartial appraisers willing to work for the policyholder (and it’s often easier for your insurance company to find an impartial appraiser).

•             Impartial appraisal umpires can be difficult to find, and they need to be approved by the insurance carrier’s appraiser.