Insurance claims can be complex, and the frustration only increases when you’re dealing with a loss that has a significant or even sentimental value.
If you have an insurance claim for property damage (whether for your home or automobile) a frequent issue is how much the damage is worth, either the value of what was destroyed, the cost of repairs, or the depreciated value of the damaged item.
Note: Insurance depreciation refers to the decrease in the value of an insured item over time due to wear and tear, age, or obsolescence.
When dealing with valuable personal items, home or car repairs, or even a total loss, it can be tough to accept an insurance payout that feels inadequate or unfair. If you find yourself in this situation, there are several ways to dispute the settlement.
Start With the Insurance Claims Adjuster or Advisor
The first step in any dispute should always be to revisit the insurance claim with the adjuster or advisor who handled the process. Many insurance issues stem from simple misunderstandings or lack of communication.
One of the most common causes for dispute is the value of the lost, stolen or damaged items, or regarding the nature and extent of repairs that are required to put you back in the same position you were prior to the loss. If you feel the insurers estimate for replacement or repairs doesn’t reflect the true cost to fix or replace your items, it’s time to escalate the matter.
Escalate the Dispute to Management
If you can’t resolve the issue with the insurance claims adjuster, the next step is to ask to speak with their supervisor or manager. If this still doesn’t lead to a satisfactory resolution, ask for the contact information of the company’s complaints officer. This person is specifically tasked with reviewing unresolved complaints and ensuring the insurer’s final position on the claim is communicated.
Consider the Appraisal Clause
When disputes arise regarding the amount of loss or the scope of damages, whether in auto or property damage claims, one possible solution is to invoke the appraisal clause in your insurance policy. This clause, found in many insurance policies, offers a non-judicial process for resolving disputes over the value of losses.
Each province has its own Insurance Act, which means they also have their own methods for resolving valuation disputes. Below, we’ve provided links to the Insurance Acts for each province, so you can review the specific dispute resolution options available to you.
- Alberta
- British Columbia
- Manitoba
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Nunavut
- Ontario
- Prince Edward Island
- Quebec
- Saskatchewan
- Yukon
The Process of Appraisal
Appraisal is a binding contractual process available to settle valuation disputes between policyholders and their insurance companies when they fail to agree on the amount of loss or the scope of damages.
Either the policyholder or the insurance company may initiate the appraisal clause, which is usually done in writing. It’s important to note that disputes centering on coverage issues or policy interpretation cannot be decided by appraisal.
The process of invoking an appraisal requires each party to pay its own appointed appraiser and bear the cost of the umpire equally.
Prior to an appraisal, you and your insurance company must have first made an honest attempt to come to a consensus as to the question of loss and damages. Appraisal is not appropriate based on an initial disagreement between the two parties without some effort to resolve the disagreement.
An insurance appraiser is a competent and neutral professional who will evaluate the claim and value of the property or amount of the loss. Each party (insurance company and policyholder) must pick its own impartial appraiser when the insurance appraisal clause is invoked. An insurance appraiser can be an adjuster, contractor, engineer, or anyone else who is competent to value and determine the amount of loss.
These appraisers work together to hopefully come to a resolution and if they cannot they then would choose an unbiased umpire who helps resolve disagreements on the loss value. The umpire’s decision is typically binding, but this process is quicker and less costly than litigation.
Typically, the insurer will appoint the adjuster or another company employee as their appraiser. You might hire a public adjuster or an expert in the subject matter such as a mechanic for vehicle damage or an art dealer to value a painting.
In selecting your appraiser, you want someone with good knowledge and advocacy skills to negotiate with the insurer and the umpire. Not every subject-matter expert has that skill.
The procedure is informal, so it often will cost much less than a lawsuit and be quicker.
The umpire will often attempt a mediated solution, using their expertise to bring the parties together, if that does not work, the umpire will then choose a position. It is important to note at least one appraiser must agree with the umpire. For this reason, the umpire typically selects the more reasonable amount instead of coming up with a completely new value.
Some appraisals are complex, with multiple issues or a need to have other experts provide information in the process. Many are straightforward.
However, when the gap between what you and the insurer believe the loss is worth is significant, appraisal could be a more affordable option than a lengthy court battle.
TIP: Use Technology to Strengthen Your Case
One way to protect yourself and ensure your claim is fairly evaluated is to provide thorough documentation. With today’s technology, you can easily collect virtual proof of the damages that occurred, which can be invaluable when filing an insurance claim.
Taking photos, creating video recordings of the loss can offer solid proof that supports your case. This visual evidence could be the key to substantiating your claim and making sure you receive an adequate payout.
Conclusion
Disputing an insurance settlement isn’t a quick process, but by following these steps and using all available resources, you can increase your chances of getting a fair and just settlement. Start by addressing the issue with your adjuster, escalate the matter if needed, and consider third-party mediation or the appraisal process for disputes over valuation. With persistence, the right evidence, and knowledge of your options, you can successfully challenge an insurance company and ensure that your insurance claim is handled to your satisfaction.
Photo: Vitaly Gariev