Your contractor just left you with an estimate that significantly exceeds that of the insurance adjuster for the repairs to your damaged home or business. Both parties seemed to be competent and conscientious professionals and you have no cause to doubt the sincerity of either.
Now what?
This is an upsetting circumstance for most people. Many will just accept the insurance company's estimate just to avoid the costly, protracted, and adversarial process of filing a lawsuit.
The Appraisal provision in many commercial and homeowner policies is an alternative to a lawsuit. In many policies, Appraisal must be attempted before any lawsuit can proceed.
The Appraisal process begins when one party, usually the Insured, submits a written demand to the other. Each chooses an Appraiser, and the two Appraisers choose an Umpire.
The two Appraisers then estimate the damages and work together to set the amount of the loss. Any irreconcilable differences are submitted to the Umpire. Agreement by any two of these three sets the amount of the loss.
Each party pays its own appraiser. The parties share the expense of the umpire if needed.
While that might appear to be an oversimplification of the process, consider this language addressing Appraisal from the Louisiana State Legislature website (RS 22:1311):
"Appraisal-In case the insured and this Company shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within twenty days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon such umpire, then on request of the insured or this Company such umpire shall be selected by a judge of a court of record in the state in which the property covered is located. 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. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally."
What can go wrong? If both Appraisers are competent, objective, and conscientious, the process should be remarkably easy and the outcome should satisfy both parties. Everyone recognizes that mistakes can happen on both sides; a properly executed Appraisal adds confidence to both sides that mistakes and omissions are suitably addressed with a minimal amount of time and expense for both parties.
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