If you arrive home from work to find your ground floor has been flooded because a pipe has burst, you should expect that your insurance company will settle your claim in a fast and efficient manner. The reality is that many insurance claims are initially denied by insurance companies.
Policyholders faced with an insurer that refuses to cover an insured’s claim or to pay the full value of the claim might have the right to pursue a lawsuit for insurance bad faith or breach of contract. However, you might have other options because the policy probably has an appraisal clause or mediation clause. These remedies are both forms of alternate dispute resolution (ADR), policyholders should not make the mistake of assuming these approaches are interchangeable. Put simply, you should carefully review your homeowners policy because an Appraisal Clause or a Mediation Clause do not provide the same level of protection to policyholders.
An appraisal clause will be contained within your policy. The provision essentially will provide that if you have a dispute with your insurance company about the value of your loss, both sides will select an appraiser. These appraisers will agree on a neutral umpire who will determine the amount of the loss. The decision of the third party joined by one of the appraisers will be binding on both parties. Although the appraisal process might not result in a perfect resolution of your insurance claim, the process is typically promoted as a prompt resolution.
The mediation process involves both the insurance company and policyholder collaborating to pick a mediator to facilitate an agreement. Unlike the appraisal process, mediation does not involve the mediator imposing a decision. The mediator’s role is only to assist the sides in reaching a mutually acceptable resolution. Typically, mediation will result in the filing a lawsuit because insurance carriers generally do not put much effort forth to resolve its dispute with the policyholder during the mediation process.
There is a trend in recent years toward insurance companies promoting mediation rather than appraisal because it tends to favor the insurance industry. When mediation does not result in a negotiated agreement, the insured is forced to file a lawsuit which can postpone a resolution for several years while litigation is pending. This delay allows the insurance company to continue investing funds that would otherwise be paid on the claim. The financial pressure on homeowners while a lawsuit is pending can be enormous. The insurance company will hope that you do not retain legal counsel who can protect your interest and guide you efficiently through the process.
If you have questions about Florida insurance claims, you are welcome to contact my Miami insurance claims dispute law firm. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.