How Much Does an Insurance Appraisal Cost?

An insurance appraisal can be an extremely valuable tool when policyholders and their insurers disagree on the value of a claim. Appraisals help determine the amount of damage to a property by having appraisers thoroughly investigate and come to an impartial decision. However, these services are not free, and generally each party must pay their own appraiser. Understanding the costs of an insurance appraisal can help policyholders prepare if they need one.

What is an Insurance Appraisal?

An insurance appraisal is a process where impartial third-party appraisers investigate a property damage claim to determine the amount of loss. Appraisals are invoked when the policyholder and insurance company cannot agree on the value of a claim.

The appraisal process involves both sides choosing their own appraiser, who will inspect the property, review documents, and determine the costs to repair or replace damaged items. Appraisers will try to negotiate an agreed amount. If they cannot agree, they will jointly select an umpire who will make the final binding decision.

Appraisals only determine the value of the loss, not whether the damage is covered under the policy. The insurer can still deny the claim even after an appraisal concludes.

Why Get an Insurance Appraisal?

There are several reasons a policyholder may want an insurance appraisal:

• The insurer’s damage estimate is much lower than expected. An appraisal can provide an independent assessment.

• There is disagreement on the extent or cause of damage. An appraisal can provide clarity.

• The claim process has stalled. Invoking appraisal can move the claim forward.

• The policyholder needs leverage in negotiations. An appraisal award gives them that.

Appraisals are most useful for large, complex claims where there are major discrepancies in damage estimates.

How Much Does a Residential Appraisal Cost?

For a typical residential property damage claim, a policyholder can expect to pay their appointed appraiser between $1,500 – $3,000. The specific cost depends on:

• Location – Appraiser rates will be higher in major metro areas. Rural areas will be cheaper.

• Damage Type – More complex losses like fire or water damage will be more expensive than a basic roof claim.

• Damage Extent – Major losses will take more time to investigate than minor damage.

• Appraiser Experience – Highly experienced appraisers will charge more. New appraisers often have lower rates.

The policyholder pays 100% of their own appraiser’s costs. The insurer covers their appraiser’s fees.

If an umpire is needed, their costs are split 50/50 between the policyholder and insurer. Umpire fees typically range from $500 – $3,000 depending on the complexity.

How Much Does a Commercial Appraisal Cost?

Commercial insurance appraisals start around $4,000 on average but can easily exceed $10,000 for large, complex claims. Commercial appraisals cost more than residential ones due to:

• Larger Properties – More buildings and land to inspect.

• Business Interruption – Loss of income/revenue claims require more forensic accounting.

• Reconstruction Costs – Commercial building materials and labor are more expensive.

• Claim Size – Larger claims require more time and resources to appraise.

Many of the same factors that influence residential fees also apply to commercial appraisals: location, damage type, extent of damage, and appraiser experience.

Other Appraisal Cost Considerations

In addition to the appraiser and umpire fees, there may be other costs:

• Expert Witnesses – Engineers, contractors, or other experts might be needed to assess technical damage aspects.

• Legal Fees – Policyholders may need a lawyer to advise them through the appraisal.

• Logistics – Travel, lodging, meals, and other expenses related to investigating the property.

To reduce costs, a public adjuster can be very helpful as they have technical expertise related to property claims.

Is an Appraisal Worth the Cost?

Before initiating an appraisal, policyholders should carefully weigh the likely costs against the potential benefits. Appraisals make the most sense when there is a large discrepancy between the claim estimates.

For small residential claims, the outcome may not justify the $1,500 – $3,000 cost. But for major claims where the estimates differ by $50,000+, an appraisal is often very worthwhile.

Consulting with a public adjuster or policyholder attorney can provide guidance on when an appraisal is the right choice. They can review the claim details and provide a cost estimate specific to the situation. This helps policyholders make an informed decision.

Can I Get the Insurance Company to Pay?

Unfortunately, the policyholder is responsible for their own appraiser fees in most cases. The only way to potentially get the insurer to cover those costs is by taking them to court and winning a judgment that they acted in bad faith.

If an insurer deliberately delays the claim, refuses to negotiate reasonably, or otherwise acts improperly, that can potentially constitute bad faith. Proving bad faith requires concrete evidence and legal action.

Absent a finding of bad faith, policyholders should plan to pay their own appraiser when starting the process. But the potential benefits often make the cost worthwhile.

Finding an Experienced Insurance Appraiser

Choosing a qualified, experienced appraiser is crucial to achieving a positive outcome. Look for an appraiser who:

• Has specific experience with property damage claims, not just real estate appraisals.

• Understands the insurance claims process and appraisal procedures.

• Has technical knowledge on damage repairs like contracting.

• Is familiar with claims valuation software platforms.

• Has strong negotiation skills.

Check references from prior clients. An appraiser can make or break the outcome.

Conclusion

Insurance appraisals offer policyholders an impartial way to resolve claim disputes with their insurer. Typical costs range from $1,500 – $3,000 for residential claims and $4,000 – $10,000+ for commercial claims. While not free, the potential benefit of reaching a fair settlement often makes the investment very worthwhile compared to accepting a lowball offer or litigation. With some due diligence selecting a skilled appraiser, policyholders can maximize their chances of a positive outcome.