What is a Property Insurance Appraisal?

A property insurance appraisal is a formal dispute resolution process used when you and your insurance company disagree about the amount of money needed to repair or replace your damaged property, not whether coverage exists. This is a critical distinction that many Florida homeowners don’t understand until they’re already in the middle of a claim dispute.

This is NOT the same as a real estate appraisal to determine your home’s market value. An insurance appraisal specifically resolves disagreements over the cost to repair or replace property damage after a covered loss, such as a hurricane, fire, or water damage, or other insured perils.

Here’s how it typically works: Your insurance company sends an adjuster who estimates your roof damage at $15,000. You hire a contractor who says repairs will actually cost $45,000. The insurance company refuses to budge. Rather than immediately filing a lawsuit, either party can invoke the appraisal clause in your policy to have neutral parties determine the accurate cost of repairs.

How Does the Insurance Appraisal Process Work?

The appraisal process is outlined in nearly every Florida homeowner’s insurance policy, typically in a section called “Appraisal” or “Appraisal Provision.”

While specific language varies by carrier, the general process follows these steps:

Step 1: Invoking Appraisal Either you or your insurance company can demand an appraisal by sending a written notice to the other party. Once invoked, both parties are obligated to participate in the process in accordance with the policy terms.

Step 2: Selecting Appraisers

Each party selects its own “competent and impartial” appraiser.

This is where the process begins to look like arbitration:

• You hire your appraiser (often a licensed public adjuster, contractor, or engineer)
• The insurance company hires its appraiser
• You typically pay your own appraiser’s fees

Step 3: Appointing a Umpire The two appraisers then attempt to agree on a neutral third party called an “umpire.” If they cannot agree within a specified timeframe (often 15-30 days), either party can petition the court to appoint an umpire. The umpire’s costs are typically split between you and the insurance company.

Step 4: The Appraisal Process. Appraisers independently evaluate the damage and estimate repair costs.

They may:

• Inspect the property multiple times
• Review engineering reports, contractor estimates, and other documentation
• Interview witnesses about how and when damage occurred
• Consult with specialists in roofing, water damage, structural issues, etc.

Step 5: Reaching an Award The two appraisers attempt to agree on the amount of loss. If they agree, their decision is binding. If they cannot agree, they submit their differences to the umpire. The umpire reviews both appraisers’ findings and decides. An agreement by any two of the three parties (your appraiser + insurance’s appraiser, your appraiser + umpire, or insurance’s appraiser + umpire) creates a binding award.

Step 6: The Binding Decision. Once an appraisal award is issued and signed by at least two of the three parties, it is legally binding on both you and your insurance company regarding the amount of loss. The insurance company must then pay the awarded amount (minus your deductible and any prior payments).

What Appraisal Resolves—And What It Doesn’t

This is perhaps the most crucial aspect to understand: Appraisal only determines the amount of loss, not coverage issues.

Appraisal DOES Resolve:

• How much does it cost to repair your damaged roof
• The amount needed to replace your damaged flooring
• The cost to repair hurricane damage to your home’s structure
• Valuation of damaged personal property
• Whether damage is repairable or if replacement is necessary

Appraisal DOES NOT Resolve:

• Whether the damage is covered under your policy
• Whether your policy excludes the type of damage you experienced
• Whether you complied with policy conditions (like timely reporting)
• Whether the damage occurred during the policy period
• Bad faith claims against the insurance company
• Claims for additional living expenses, business interruption, or other consequential damages
• Disputes about policy interpretation

Real-world example: Your home suffers extensive water damage. Your contractor estimates $80,000 in repairs. The insurance adjuster says only $30,000. You invoke appraisal, and the award comes back at $75,000. The insurance company must pay this amount unless it has a valid coverage defense (such as claiming the water damage was caused by a flood, which is typically excluded). If a coverage dispute exists, appraisal doesn’t resolve it, and you may still need to litigate the coverage issue.

When Should You Consider an Appraisal?

Appraisal can be beneficial in certain circumstances, but it’s not always the right choice.

Good Candidates for Appraisal

• Clear Coverage, Disputed Amount: You and the insurance company agree that damage is covered, but disagree significantly on repair costs. The insurance company isn’t denying your claim—they’re just lowballing the estimate.
• Straightforward Damage Evaluation: The loss involves relatively objective measurements: square footage of damaged roofing, number of damaged windows, and cost to replace flooring. These are easier for appraisers to evaluate than subjective damage assessments.
• Time-Sensitive Repairs: You need to make repairs quickly (like securing a damaged roof before more rain comes), and litigation could take 1-2 years. Appraisal typically resolves within 3-6 months.
• Strong Documentation: You have solid evidence of damage and repair costs: multiple contractor estimates, engineering reports, and photographic evidence. This gives your appraiser ammunition to support a higher award.
• Significant Dollar Amounts in Dispute When tens of thousands of dollars separate the positions, appraisal can be cost-effective compared to litigation, which involves attorney fees, depositions, expert witnesses, and court costs.

Poor Candidates for Appraisal

• Coverage Disputes Exist: The insurance company is denying that damage is covered at all (claiming it’s flood damage, pre-existing, gradual deterioration, etc.). Appraisal can’t resolve coverage; you’re wasting time and money if the factual dispute is whether the policy covers your loss.
• Bad Faith Issues: Your insurance company has acted in bad faith: unreasonably delaying your claim, failing to investigate properly, making lowball offers on obviously significant damage, or violating Florida insurance regulations. Appraisal doesn’t address bad faith, and you may have valuable bad faith claims worth more than the underlying property damage.
• Multiple Complex Issues: Your claim involves questions about policy interpretation, causation disputes (was damage from hurricane winds or excluded flood?), or multiple events causing cumulative damage. These complex issues exceed the appraisal’s limited scope.
• Small Dollar Disputes: If you’re only $5,000-$10,000 apart on a claim, paying for your own appraiser and half the umpire’s fees may cost nearly as much as the disputed amount.
• The Insurance Company Invoked Appraisal Prematurely: Sometimes insurance companies invoke appraisal immediately to avoid a thorough investigation or to prevent you from discovering their bad faith. If they’re rushing to an assessment before properly investigating your claim, this is a red flag.

The Costs of Appraisal

Unlike litigation, where your attorney typically works on a contingency basis for property insurance claims, you usually pay for appraisal services out of pocket.

Typical Appraisal Costs:

Your Appraiser:

• Public adjusters: Often work on a percentage of recovery (10-20% of the settlement)
• Independent appraisers: $150-$300 per hour
• Engineers or specialized appraisers: $200-$400 per hour
• Total cost: $3,000-$15,000+ depending on complexity

Umpire (Split 50/50 with Insurance Company):

• $200-$400 per hour
• Your share: $1,500-$5,000+ depending on case complexity

Additional Costs:

• Engineering reports: $1,000-$5,000
• Contractor estimates: Often free, but detailed scope of work documents may cost $500-$2,000
• Attorney fees if you hire counsel to guide the appraisal process: Varies

Total out-of-pocket: $5,000-$25,000 or more for complex cases.

Important consideration: If the appraisal award is significantly higher than the insurance company’s original estimate, you may be able to recover some appraisal costs as part of your claim or in subsequent bad faith litigation. However, this isn’t guaranteed and depends on your policy language and Florida law.

Common Pitfalls in the Appraisal Process

Many Florida homeowners enter an appraisal without understanding the risks.

Here are the most common mistakes:

1. Choosing the Wrong Appraiser

Your appraiser is your advocate in this process. Choosing someone unqualified or inexperienced can cost you tens of thousands of dollars.

Red flags to avoid:

• Appraisers who don’t specialize in property damage (you need someone who understands construction costs, not just property values)
• Anyone who guarantees specific results
• Appraisers who don’t inspect the property thoroughly
• Someone recommended by your insurance company (conflict of interest)

What to look for:

• Licensed public adjusters in Florida
• Experience with your specific type of damage (hurricane, fire, water)
• Strong track record in appraisal proceedings
• Professional credentials (certifications, memberships in industry organizations)
• Willingness to hire engineers or specialists when needed

2. Invoking Appraisal Too Early

Some insurance companies invoke appraisal immediately after you file a claim, before conducting a thorough investigation. This can be a tactic to:

• Avoid discovering additional damage
• Prevent proper documentation of losses
• Rushes you into a binding decision before you understand the full extent of damage
• Limit their liability by framing the dispute as “amount” only

You have the right to complete your own investigation before participating in the appraisal. Don’t let the insurance company rush you into the process.

3. Not Understanding What’s Being Appraised

Appraisal determines “the amount of loss,” but what does that mean for your specific claim?

Critical questions:

• Are you appraising the cost to repair or the replacement cost value (RCV)?
• If there’s prior damage, are you appraising only new damage or cumulative damage?
• Are depreciation and code upgrade costs included?
• What about general contractor overhead and profit?
• Are temporary repairs or emergency mitigation costs included?

These issues should be clarified before the appraisal begins. Ambiguity benefits the insurance company, not you.

4. Failing to Preserve Coverage Disputes

If you participate in an appraisal, you may inadvertently waive your right to challenge coverage denials later.

Example scenario: The insurance company claims your roof damage is 60% pre-existing wear and only 40% hurricane damage. They invoke appraisal to determine the “amount of loss.” The appraisal panel awards $50,000 in total damage. The insurance company then applies its 60/40 split and only pays you $20,000 (40% of $50,000).

If you participated in an appraisal without preserving your right to dispute the causation issue, you may have lost your ability to challenge the 60/40 split in court.

Protective language: Before agreeing to an appraisal, you or your attorney should send a written notice reserving all rights related to coverage, causation, and policy interpretation. Participation in appraisal should be “without prejudice” to these other claims.

5. Accepting an Inadequate Award

Remember, the appraisal award is binding. If your appraiser does poor work or the umpire sides with the insurance company’s appraiser, you’re generally stuck with that result even if it’s far less than the actual cost of repairs.

Limited grounds to challenge an appraisal award:

• Fraud or corruption in the appraisal process
• Evident partiality or misconduct by the umpire
• The appraisers exceeded their authority (decided coverage issues, not just the amount)
• Material miscalculation or mistake

These are demanding standards to meet. Once an appraisal award is final, you typically cannot challenge it simply because you disagree with the amount.

Appraisal vs. Litigation: Understanding Your Options

When you and your insurance company reach an impasse, you have choices:

Appraisal:

• Timeline: 3-6 months typically
• Cost: $5,000-$25,000 out-of-pocket
• Scope: Amount of loss only
• Outcome: Binding decision on repair costs
• Best for: Clear coverage, disputed amounts, straightforward damage

Litigation:

• Timeline: 1-3 years to trial
• Cost: Contingency fee (insurance company may pay your attorney fees if you win)
• Scope: Coverage, amount, bad faith, attorney fees, all policy disputes
• Outcome: Court judgment that can include damages beyond just repair costs
• Best for: Coverage disputes, bad faith, complex claims, when the insurance company violated Florida law

Mediation (Before or Instead of Litigation):

• Timeline: Can occur within weeks
• Cost: Usually split 50/50, $400-$800 per party
• Scope: All issues negotiable
• Outcome: Settlement if both parties agree (non-binding process)
• Best for: Both parties willing to compromise, avoiding litigation costs

Florida-Specific Appraisal Considerations

• Florida Statute 627.7015 – Notice of Right to Appraisal: Florida law requires insurance companies to notify policyholders of their right to appraisal when a claim dispute arises. The insurer must provide this notice in writing when denying or disputing any part of a claim. Failure to provide proper notice can be grounds to challenge the appraisal process or even constitute bad faith.

Do I Need a Lawyer for the Appraisal Process?

While the policy may not require an attorney, having legal representation is extremely valuable.

Our expert Florida insurance claim attorneys can:

• Determine if appraisal is the right choice
• Prevents you from waiving rights to sue or claim bad faith
• Recommend trustworthy appraisers and experts
• Protect you from insurer manipulation
• Ensure the scope of damages is properly considered
• Challenge an improper appraisal award in court

Without legal guidance, homeowners risk being pushed into an appraisal that benefits the insurer, not them.

Why Williams Law Association, P.A. for Appraisal Disputes

The appraisal process can be complex, intimidating, and costly if not handled correctly. Insurance companies use appraisals hundreds of times per year, and they know how to manipulate the process to their advantage. You need experienced legal counsel who understands both the technical aspects of property damage and the strategic considerations of appraisal.

Don’t navigate the appraisal process alone. Insurance companies have teams of adjusters, appraisers, and attorneys working to minimize what they pay. You deserve equally aggressive representation fighting for your full recovery.

If you’re facing an insurance claim dispute in Florida, contact Williams Law Association, P.A., for a free consultation. We’ll evaluate whether an appraisal is appropriate for your situation and explain all your options for recovering the full amount you’re owed.