A renter’s insurance appraisal is used in negotiations over the contested value of belongings covered by a policyholder’s renter’s insurance.
Renter’s insurance is an affordable way to protect you from having to pay for the loss or damage of your personal possessions due to any covered disaster. While renter’s insurance is not nearly as popular as homeowner’s insurance, it can be just as important to protecting your livelihood. Most renter’s insurance plans provide coverage for the majority of personal possessions that are not extremely expensive or explicitly prohibited, while some may also include liability coverage and additional living expenses (ALE) coverage as well. Depending on how much coverage you purchase, most plans will cost only between $15 and $20 a month and provide you with thousands of dollars of coverage. Understanding how renter’s insurance appraisals work, the pros and cons of requesting an appraisal yourself and the types of items that you may want to have appraised is essential to making sure you receive the full value for your possessions in insurance coverage and, in the case of an insured disaster, the payout amount.
A renter’s insurance appraisal is generally used to help the policyholder and the insurance company comes to a fair agreement about the value of insured belongings in the case of a disagreement. Unlike homeowner’s insurance appraisals that usually examine the trustworthiness of the structure intended for purchase, renter’s insurance appraisals are meant to quickly and efficiently resolve conflicts between the insurance provider and the policyholder over the cost of replacing or repairing damaged personal possessions. Both the insurance provider and the policyholder may request a renter’s insurance appraisal for one or multiple insured items. If you own a highly valuable item that you know is difficult to price, it may be best to get the item officially appraised for the insurance agreement, before you have to file a claim.
More typically, however, a renter’s insurance appraisal occurs for personal possessions after an insured disaster has already damaged or destroyed them. A panel of appraisers typically carries out insurance appraisals. In this way, each party is given equal opportunity to make their case and the appraisal can be considered fair. There should also be a neutral third party to mediate the hearing and break any deadlocks. Upon examining whatever evidence has been submitted in support of each party’s claim for the correct value of the disputed possessions, the panel should come to a decision of the final award amount to the policyholder by the insurance provider. If the award amount is accepted by both parties, the appraisal is done. If either party challenges the results, further negotiations will follow.
If there is a significant disagreement over the value of your personal property or liability coverage, requesting a renter’s insurance appraisal may be the only way for you to change the insurance provider’s initial decision. It is important to note, however, that insurance providers tend to have the upper hand in renter’s insurance appraisal negotiations because of their wealth of experience with such appraisals and the seasoned appraisers working on their behalf. To seriously negotiate your side of a value dispute, you will most likely have to hire your own party appraiser, oftentimes a specialized lawyer, and pay half of the mediator’s fees. If both parties do not accept the panel’s original outcome, further hearings will continue to cost more time and money from all participating parties.
Luckily, this process has been streamlined by legislature in some states, making the appraisal’s process both more accessible and informal. In some states, an official renter’s insurance appraisal can be completed within a few months and without hiring third party appraisers, attorneys or mediators. Renter’s insurance appraisal panels can be particularly useful in straightforward conflicts of opinion, such as disagreements over the estimated costs of materials and labor for a necessary repair. Renter’s insurance policyholders should also note, however, that appraisal panels do not guarantee being able to resolve the dispute. You could invest your time and money in the renter’s insurance appraisal process only to have to then invest more resources in litigation. Hiring an experienced party appraiser or insurance attorney, however, will increase the likelihood that you are getting the fairest possible value for your covered possessions.
Submit a list of the most important items you expect to be covered under your policy and their purchase price and date, as applicable. This will help insure you buy the right amount of renter’s insurance coverage and increase the likelihood that you can avoid having to face a disagreement about the cost of covered items in the future. You do not necessarily need to buy enough coverage to cover the replacement cost of everything you own, but can instead opt for just enough to cover the most important things you own or some combination of the two.
At this point, you should know whether you are shopping for an actual cash value (ACV) plan or a replacement cost plan. After an insured disaster damaged your belongings, ACV plans will provide you with funds equivalent to the current day value of your items, depreciated since their original purchase date. Replacement cost plans, on the other hand, provide coverage for the cost of the item to be purchased brand new at today’s current rates. Because replacement cost plans tend to pay out higher amounts, they also tend to have higher premiums and deductibles.
While everyone’s list of personal property and value will be unique, some categories can apply to most people. Make sure you think about including the following belongings on your renter’s insurance policy: