Appraisal: a cost-effective way to resolve property insurance claims

July 26th, 2012 by

It’s everyone’s worst nightmare.  You wake up in the middle of the night to the piercing sound of the smoke detector and you, your spouse and children rush out of your home, only to see it go up in smoke as firefighters do their best to quell the fire that is consuming it.  Or after a pleasant summer weekend away, you find your backdoor has been forced open, your home ransacked, and that your most valuable personal belongings have been either damaged or stolen.  The loss is devastating.

You report a claim under your home insurance policy.

Most insurance claims are satisfactorily resolved, quickly and efficiently.  Sometimes, however, the policyholder and the insurance company do not, for whatever reason, agree on what the loss is worth.  A dispute over this can drag on for months, perhaps years, often leading to expensive litigation.

Is there some other option?

Luckily, home insurance policies in Ontario contain a clause which allows policyholders and insurers to elect for a real estate appraisal under the Insurance Act, a process in which the insurer and policyholder each hire an appraiser, generally an insurance adjuster or someone expert in insurance claims, who, with an umpire (who will decide any matters that the two appraisers cannot agree on), will determine the value of the loss.  The decision is binding and will very rarely be interfered with by the courts and really only in exceptional cases of fraud, collusion or bias.

Each party to the appraisal pays its own costs, they split the expense of the umpire, and, here is the best part, something that might otherwise take years, can generally be resolved in a matter of weeks.

Appraisal is particularly well suited for large losses (like a significant fire in your home), but because it may cost a few thousand dollars, may not be best for smaller claims.  That said, it is certainly something worth exploring with a public insurance adjuster or with a lawyer.

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