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Are Appraisals Necessary When the Insurance Company Partially Denies Claims?


Almost every homeowner insurance policy has some provision that allows a homeowners insurance company to try to avoid court in the event of a dispute. Usually, this kind of avoidance is done through appraisal. The standard policy will say that if the insurance company denies the claim, the homeowner can (or must) submit to an appraisal through a neutral appraiser, to try to resolve the claim.

When Appraisal Matters

The problem is that an appraiser determines the amount and extent of damage. An appraiser doesn’t look at your policy to see if a loss is covered or not. That means that when the insurance company denies coverage completely, saying that the loss isn’t covered, the part of the policy that compels the homeowner to submit to an appraisal isn’t applicable.

On the other hand, if the insurance company says “yes, the loss is covered but we disagree as to how much of it is covered, or the cost of coverage,” that is something appraisal can resolve, and that part of the policy compelling appraisal will be applicable.

Unfortunately, in most policies, the decision of the appraisers is mandatory and binding. The appraisal clause effectively strips a homeowner of his or her day in court.

Partial Denials

In many cases, the insurance company, when it denies claims, will do a half denial. In other words, it will say part of your claim is covered and another part is not covered. The question then becomes, does the homeowner have to submit to an appraisal first, or can the homeowner just go directly to court and sue for breach of contract?

In those cases,where there is a partial denial of coverage, court decisions have held that the appraisal must occur. At least one case has held that causation—the question of what caused the damage, and whether that cause is a covered cause or not under the policy—is the only time the homeowner can forego the appraisal process, and instead jump directly to a lawsuit.

Partial Denials are Encouraged

In fact, there is case law that says that when an insurance company completely denies coverage, it can relinquish the insurance company’s rights under the contract. That can include vital rights to the insurance company, such as alternative dispute resolution or other limitations that are favorable to them.

This creates an incentive for the insurance company to admit coverage to some extent, which is why it is often rare to see a complete, outright denial of coverage other than the most extreme circumstances. The insurance company is better off admitting some coverage, but only to a limited extent, in order to invoke the protections of the insurance contract.

Contact the Miami property damage insurance lawyers at Velasquez & Associates P.A. today for help if your insurance company is denying coverage or not paying what they owe after your property has suffered damage or any kind of loss.

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