Knowing The Difference Between Appraisal And Arbitration In Florida Homeowners Insurance Claims
When differences arise between a homeowner and their insurer, these disputes can take different forms. To resolve disputes, the most common approaches are appraisal and arbitration. To the average property owner, these sound the same and would seem to have the same result in the end. However, these two dispute-resolution methods are significantly different, and it is important for policyholders to understand the differences between arbitration and the appraisal process.
What is Appraisal in an Insurance Claim?
Appraisal clauses in insurance policies are used to determine the value of losses involved in a claim, and are binding on the parties only in regard to the amount of the loss. (See Preferred Ins. Co. v. Richard Parks, 158 So.2d 817, 820. Appraisal is not used to determine what is or is not covered, or who was at fault. The appraisal process typically involves obtaining a professional opinion on the monetary value of the property and damages involved. For example, when insurers and property owners are unable to agree on the value of a property damage claim, the policy’s appraisal clause can help resolve the dispute.
Appraisal is more narrowly focused than arbitration and is less expensive and time-consuming than arbitration can be. For some, when an insurance dispute boils down to whether a covered item was worth $500 or $5,000, appraisal can work to address the difference and give both sides an answer.
What is Arbitration in an Insurance Claim?
Arbitration is a more formal process than appraisal and is meant to address a wider number of issues. Arbitration is a “quasi-judicial” proceeding that affords many of the same procedural safeguards that a court of law does. (See Citizens Prop. Ins. Corp. v. Mango Hill #6 Condo Ass’n, Fla 3rd DCA, 2013.) Insurance arbitration in Florida is also subject to the Florida Arbitration Code, with detailed requirements and procedures for both parties involved.
Arbitrators in a case must be independent, free from bias, and unaffiliated with either side. Once selected, the arbitrator will review the facts as presented by both sides – similar to a court hearing – and decide on an arbitration award for the claim after the arbitration proceeding concludes. The arbitration award will include a summary of all information presented about the claim, along with the arbitrator’s final decision on damages, fees, and any other issues in dispute. An arbitrator’s award can be binding or non-binding, if both parties agree.
One issue with arbitration clauses, and the arbitration process in general, is that this forum tends to favor corporate interests and insurance companies, because of their familiarity with those parties. An individual homeowner that has never been through arbitration before can be at a real disadvantage if going it alone before an arbitrator.
Our Florida Property Damage Attorneys at Bundza & Rodriguez, P.A., Can Answer Your Questions and Help if Your Claim is Subject to Appraisal or Arbitration
It is important for property owners to know what appraisals and arbitrations involve, and understand the right steps to take in these situations. For many homeowners, this will be their first time dealing with an appraisal or arbitration. Insurance companies deal with thousands of these every day, and start out with an advantage over their insured customer. Our Daytona, Florida property damage insurance attorneys at Bundza & Rodriguez, P.A., can help if you have any questions or concerns about these issues. To learn more, call our Daytona law offices today at 386-252-5170, or schedule a consultation with our Daytona Beach property damage attorneys online.