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Eaton & Johnson, Inc. Appraisal Services
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The Basic Steps of the Appraisal Process
The wording of the Appraisal section of California Insurance
Code 2071 defines the steps of the appraisal process.
Define the Dispute
In case the insured and this company shall fail to agree as to the actual cash value or the amount of loss
Do you actually have an irresolvable dispute? Are you able to clearly articulate your position and the position of the other party in order to define the dispute? It is very important that you are able to set forth your position. Separate the portions of the claim with which you agree from those you don’t. Clearly explain your position as well as the position of the other party to the extent you can, for your own benefit before you demand the Appraisal process. If you do not clearly define the dispute and your position each will be defined for you in the Appraisal process.
Make the “Request”
The code section continues:
then, on the written request of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of the request.
This part of the process was previously know as the “demand” for Appraisal, but in the event of “a government-declared disaster” the process may not be compelled. Either the insurer or the insured may compel it if there is no such “government-declared disaster”. The wording of this exception to compelling Appraisal appears at the end of this section of California Insurance Code 2071:
In the event of a government-declared disaster, as defined in the Government Code, appraisal may be requested by either the insured or this company but shall not be compelled.
You may make your request for Appraisal and then select your appraiser. The wording of the request may be simple and need not define the dispute.
Select Your Appraiser
The code section continues:
select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of the request.
The words “competent and disinterested” are important in selection of the appraiser. The appraiser is not an advocate for either party. Failure to select a “competent and disinterested” appraiser may give the other party grounds for objection to employment of that individual in the process.
Appraisers Selection of Umpire
The Appraisal panel is made up of your appraiser, the appraiser selected by the other party, and an umpire selected by the two appraisers. Continuing along in the Code:
the appraisers shall first select a competent and disinterested umpire
This is a very important selection because, as outlined farther into the body of this section of the Code, it is the umpire who resolves any differences between the two appraisers and both appraisers and the umpire need not agree to the award to enter it. The award may be reached by agreement of the two appraisers or one appraiser and the umpire:
The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual cash value and loss.
The appraisers select the umpire, but you may object to the umpire chosen. The Code provides for Court assignment of an umpire if agreement can not be reached on the selection by the appraisers:
failing for 15 days to agree upon the umpire, then, on request of the insured or this company, the umpire shall be selected by a judge of a court of record in the state in which the property covered is located.
The Process
The Code holds that:
The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item
This sounds like it should be straightforward, but it may not be in the interest of either side of the dispute to simply let the appraisers go off and “appraise the loss”. You will probably prefer to agree upon a method by which evidence will be presented to both appraisers by both sides in an organized fashion. Remember that the appraisers are supposed to both be “competent and disinterested”. They are not advocates for either side of the dispute. They are charged with the impartial and unbiased analysis of the value of the loss. All available documentation and other evidence of the amount of loss should be exchanged between the parties and provided to each appraiser. It is also recommended that everything provided to the appraisers also be provided to the umpire at the same time to be certain that all three members of the appraisal panel have equal information for their analysis.
The Hearing
In the simplest terms the hearing is a meeting of the parties and the appraisal panel that is conducted by the umpire during which each side of the dispute presents evidence. The Code includes the following concerning the hearing:
Appraisal proceedings are informal unless the insured and this company mutually agree otherwise. For purposes of this section, "informal" means that no formal discovery shall be conducted, including depositions, interrogatories, requests for admission, or other forms of formal civil discovery, no formal rules of evidence shall be applied, and no court reporter shall be used for the proceedings.
It may seem that holding a hearing is more complicated, and thus more expensive, than skipping this optional part of the process to let the appraisers set the amount of loss on their own. Sometimes this may be the case but the parties should carefully consider the advantages of everyone hearing and seeing the evidence presented to the entire panel at the same time.
The Award
The award is reached when any two members of the appraisal panel agree. This may be the two appraisers, one appraiser and the umpire, or a unanimous determination of all three. The award may be a simple written statement such as: “The actual cash value of the loss is $____” that is signed by the panel members who are in agreement. The parties may also agree to as detailed an award as they may want.
The award is binding on both parties. In some situations the award may be challenged, but this would require legal action by the dissatisfied party.
To Appraisal Step-by-Step
