The Appraisal Process

Statutory Condition 11 of a Standard Property Policy triggers Appraisal. The process is outlined in s.128 of the Insurance Act of Ontario or similar Insurance Acts in other Provinces.

When both parties, represented by duly appointed appraisers under the Act, select George R. Milnes to act as umpire, their names and contact information provided, this is what they may expect:

      • An email to set out a date and time for a conference call:
      • To confirm my availability and willingness to act;
      • To confirm policy number, insured peril, date of loss, the location of loss;
      • To confirm coverages involved in the appraisal: Building, Contents/Stock & Equipment, ALE, Loss of Rental Income/B.I.; (subject to Act and agreement of both parties)
      • Clarify the powers of the Umpire and Appraisers;
      • Set tentative dates for submission/exchange of briefs and appraisal meeting: date, time, special equipment etc.;
      • Identify number of witnesses.

Next Steps:

      • An Appraisal Agreement to be signed by both parties;
      • A paid initial retainer;
      • The umpire will arrange for a meeting room and special equipment if required.

What to expect next!

      • It is the insured’s loss, and as such, the Proof Of Loss (POL) submission that has been rejected will be considered the basis in determining the amount of loss.
      • Updated POL’s with supporting documentation will be considered up to the time of briefs’ submission.
      • Appraisers are encouraged to meet with one another to identify issues in dispute for resolution before the umpire.
      • Building losses should be reviewed by category and line items, identifying only those items where the amount of loss, both replacement cost (RC) and actual cash value (ACV) is in dispute.
      • Contents (personal property/stock and equipment) should be reviewed by category and line items and perhaps room or location, identifying only those items where the amount of loss, for either RC and ACV is in dispute.
      • A similar approach to be made for other issues, forensic accounting reports encouraged for rental and business income (B.I.) Losses.
      • If the appraisers can agree between themselves, on a category or line item basis for RC and ACV, the amounts should be reflected beside the category or line items previously in dispute. Spreadsheet suggested.
      • If the two appraisers come to an overall agreement concerning the amount of loss they should prepare and sign an Award, the appraisal process completed.
A sample, award document can be provided upon request

When the overall amount of loss is not determined between appraisers!

      • Briefs are to be prepared to address in particular those issues in dispute, the principle of “best evidence” will be given the most weight. Policy declarations and wordings, engineering reports, drawings, photographs and other professional or vendor reports are encouraged.
      • Appraisers are also encouraged to provide support for their opinions, including photographs, legal opinions and case law etc.
      • Witnesses should be identified, their background and experience or CV’s provided-also, the topic they are being requested to speak to outlined.
      • When appraisal is to determine the amount of loss for more than one line of coverage, appraisers are requested to outline their order of preference. A conference call may be necessary. *
      • Briefs shall be exchanged between appraisers with a copy submitted to the umpire at least ten (10) business days before the appraisal meeting. If an exchange is not convenient, two copies of appraiser’s briefs may be submitted to the umpire, Priority Post or Courier Service recommended for delivery.
        Upon receipt of both sets of briefs, the umpire will courier opposing appraiser’s brief to one another. Depending upon the nature and extent of loss or damage, briefs may be transmitted electronically.
      • If a site or off-site meeting is requested by either appraiser, the umpire will agree. This is encouraged when there is physical evidence available for inspection on-site, warehouses, storage lockers, etc.
      • Upon review of briefs or discussion with appraisers, the umpire may also suggest site inspections.
      • If new evidence is brought forward by either appraiser after exchange of briefs or at the appraisal meeting the umpire will entertain a request for an adjournment to allow each party time to review/investigate/examine the new evidence.

Day of Appraisal Meeting

      • Umpire to address those present re authority of appraisal and process to be followed;
      • Appraiser for the insured to present an opening statement;
      • Appraiser for the insurer to present an opening statement;
      • First item for discussion, followed by second, third, etc., e.g. Building; Contents; ……. * Order for discussion to be agreed to before the appraisal meeting based on availability of witnesses.
      • Witnesses for both parties should be prepared to address issues in dispute in support of best evidence rule and take questions from both appraisers and the umpire.
      • Witnesses may be sequestered if either appraiser so requests. If witnesses for both parties remain and upon listening to witnesses for opposing party have any questions, those questions should flow through the respective appraiser unless agreed by the tribunal that witnesses have an open discussion re each other’s opinion.
      • Witnesses for opposing parties may be asked by the tribunal to meet separately and between themselves discuss any particular category or line items to see if they can agree between themselves as to RC and make joint recommendations back to the tribunal. A breakout room will be provided.
      • An example would be when discussing a building loss and witnesses for both parties are building damage estimators or restoration contractors. One believes in a higher number of labour hours for particular repair line items. When discussing between themselves, they may come to an agreement and make a joint recommendation to the tribunal where it may be accepted or further explored.
      • The insurance industry standard is the use of Xactimate estimating software or another similar estimating software for building damage losses. Depending on how a particular line item is categorized, the trade summary categories may be skewed.
      • Observers will be allowed, recordings and note taking prohibited.
      • There will be encouragement on the part of the umpire to bring appraisers together and agree on amounts of loss on a category basis. Where agreement between appraisers cannot be reached, the umpire may side with one or the other or in some cases after reviewing evidence, questioning of witnesses and discussing the issues or line items in dispute, present a figure himself for acceptance, two of three in agreement becoming binding.
      • Once the RC of line items and category is agreed to by two of three tribunal members, it will not be revisited. New evidence will not be allowed to be introduced once a decision has been made.
      • ACV may be determined on a line item, category or global basis. Again, when two of three agree.

Finally

      • A written award will be drafted, reviewed and edited by the tribunal as necessary.
      • A unanimous award is always sought, and members will be invited to sign the award, the appraisal considered completed when agreed to and signed by two of three tribunal members.
      • Following a written Award, briefs for both parties will be returned to respective appraisers.

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4-1550 Kingston Road
Box 1412, Pickering
Ontario L1V 6W9

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