Commercial Insurance Policies: What the Appraisal Clause Means for Your Business

While the appraisal clause is typically a thing of the past for Florida homeowner’s insurance policies, it is still part of commercial insurance policies. What does that mean for you if you are a Florida business owner with a commercial insurance policy?

Let’s say that you have a water leak and the resulting flood does thousands of dollars in damage to the entire first floor of your building. Computers, desks, paper, supplies, documents, records…everything is a wet, squishy mess. Circuits are fried and every wood surface is warped.

You call your insurance company and they send someone over to review everything with you. You hire a Florida Public Adjuster and he reviews your policy and determines that you have “inventory preparation coverage”, which is sometimes found in commercial policies. While he has an outside firm conduct the documentation of business personal property, he reviews your “Business Interruption Coverage” and sets up meetings with your accounting department to document any loss of business due to the loss. He also has a Building Inspection Damage Estimate conducted, which will take some time to complete.

Fast forward a few months and your Florida Public Adjuster has received and submitted the Business Personal Property claim, the building damage repair claim, and continues to work on the Business Interruption portion of the claim. He contacts you to notify you that your insurance company has issued their offers on both the business’ personal property damage and the building damage, and it is far less than what you expected, well beneath the coverage limit, and not nearly enough to repair the damage or replace the damaged property.

Your Florida Public Adjuster explains that he will contact the insurance company and demand a second inspection so that you can go back to taking care of recovering and running your business. 

Your Public Adjuster later contacts you and notifies you that he was able to negotiate an additional $16,000 on your business’ personal property claim, as well as another $18,000 on your building damage claim. Although much better than the insurance company’s original offer, you are still worried that you may not be able to recover all of your stock and equipment. Your Public Adjuster refers you to your Florida commercial insurance policy and points out the “appraisal clause”. He explains that this allows you to demand a binding appraisal of your damaged business’ personal property, in the event of disagreement over the value of your claim. It works very much like tripartite arbitration, in which each disputing party appoints their own appraiser, and then the two appraisers appoint an impartial umpire. 

Confused? This means that you can retain an appraiser who would ensure that all of your damages and supporting documentation is entered in as evidence to a panel, and independently appraise the entire loss, in order to come up with a reasonable coverage offer for the amount of loss. The insurance company’s appointed appraiser does the same, and once both are completed, they compare and review. Any items that they do not agree to after diligent efforts to come to an agreement have been made, are submitted to the impartial umpire. The appraiser that you hired will then present his case to the umpire, call witnesses, or provide additional evidence that supports his valuation. The opposing appraiser will do the same, and the umpire will eventually make a ruling based upon both appraiser’s submissions and arguments.

The core purpose of an appraisal, aside from its basic ADR benefits of providing the policyholder a less costly and faster alternative than hiring an attorney and filing a lawsuit, is to make the person, or in the case of a commercial loss, the business entity whole again. Due to appraisal’s procedural and valuation methodology, it typically results in an award that is very accurate to the amount of the loss; and many times, this means a dramatic increase to the amount that the insurance company initially attempted to offer.

If your Florida business has recently suffered a loss and you need assistance, call Advocate Claims Public Adjusters. Their staff of licensed public adjusters have extensive experience in both first party insurance claims, as well as the Insurance Policy’s Appraisal Clause. Their team has helped thousands of Florida home, condo, and commercial clients get the settlements they deserve, either by acting as a Public Adjuster or as an Appraiser, for more than 10 years. Contact the Public Adjusters at Advocate Claims today at 954-369-0573 to speak with a licensed public adjuster about the insurance claim process and what we can do to help.

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