Understanding Property Insurance: Appraisal Provisions

Due to the growth of New Orleans’ population and workforce, the need for housing and

commercial property is expected to increase over the next decade. As the metropolitan area rises

to meet this demand, it is important to understand the intricacies surrounding appraisal

provisions, a small but crucial aspect of property insurance coverage.

Phone: (504) 568-1990 Address: Fax: (504) 310-9195 601 Poydras Street, Suite 2775 Website: www.lawla.com New Orleans, LA 70130

The content of this presentation does not constitute legal advice.

UNDERSTANDING PROPERTY INSURANCE:

Appraisal Provisions

Appraisal provisions: A small but crucial part of property insurance!!According to recent news reports, New Orleans’ rising population and growing workforce needs are expected to result in much higher demand for housing and commercial property throughout the next decade. !As the metropolitan area rises to meet this demand, it is important to understand the intricacies surrounding appraisal provisions, a small but crucial aspect of property insurance coverage. !!!!!!!!

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!!When property damage occurs, it is not uncommon for a policyholder and the insurance company to disagree on the value of the loss. When this happens,

either party can invoke an appraisal provision as a way to reach a resolution

without entering into litigation.!!Each side chooses an appraiser to determine the value of the property and the amount of the loss. The losses can include damage to a dwelling, structures like a fence or a storage shed, or the contents inside a business or home. If the appraisers cannot agree on a value, an umpire is appointed. When the umpire and either appraiser agree to a figure, the amount of the loss is set. !!!!!!!!

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Appraisal provisions: What you need to know !• Appraisal provisions should not be invoked until both the policyholder and the insurer agree on

the scope of damage, though in practice that is not always the case. Also, appraisals are not just limited

to damage to property. Appraisals can be used to determine the amount of a financial loss as well. !• Appraisals are not meant to decide questions over coverage or causation – the circumstances that

lead to the damage. But some courts have acknowledged that, as a practical matter, appraisers must sometimes make a judgment call on causation to determine the value of the loss.

!• What happens if an appraisal involves a judgment call and one side isn’t happy with the outcome? The

appraisal figure can be challenged to a point, though once set, it is presumed to be accurate. Even so,

the appraisers’ determination of causation is not binding in Louisiana. Both the policyholder and insurer should still have the right to challenge causation determined in an appraisal.

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!!!The complexity of property-loss-causation-and-valuation issues like this leads many insurance

companies to seek the advice of knowledgeable legal counsel. At Lugenbuhl, our Insurance

Practice provides analysis of commercial and homeowners’ property insurance coverage to

many of the nation’s largest insurers. Our attorneys have unique experience and a broad base

of knowledge in this area. !Lugenbuhl shareholder Seth Schmeeckle has dedicated his entire legal career to counseling and representing insurance companies in disputes involving liability and property coverages. View

his profile to learn more about his extensive experience and professional credentials or call

504-568-1990. !!!!!!!!!

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http://www.lawla.com/practices/commercial-property-homeowners-property-insurance-coverage/

http://www.lawla.com/attorneys/seth-schmeeckle/

To learn more about real estate issues in port development, contact Lugenbuhl.

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Seth A. Schmeeckle Attorney At Law | New Orleans Office !CALL: (504) 568-1990 EMAIL: [email protected] VISIT: http://www.lawla.com/attorneys/seth-schmeeckle/

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