Don't confuse the Appraisal Process with Arbitration. It's very similar, in a general understanding sense, because most people have heard of an arbitration before. But lets separate the two for a better understanding.
Arbitration can be defined as a process to resolve a dispute or difference between two parties. The depute allows for a decision by a person or persons other than a court of jurisdiction. Arbitration can be regarded as a private form of litigation. The procedure for arbitration is also regulated by statute. Arbitration is a legal process resulting in a final and binding decision issued by the arbitrator which can only be challenged under very exceptional circumstances. Arbitration works under a similar legal mechanism as litigation, but with some added advantages over litigation. It is conducted in a private place so that confidentiality can be preserved.
- The Appraisal Clause does not bind either party to its findings, however, the award is binding. The Appraisal Clause is meant to be the method for determining disputed values. If the value of an item or the costs to repair or replace it cannot be agreed upon, then the insurance policy allows an appraisal process to determine the amount of loss - or the value of the loss. Appraisal cannot be used to determine what is covered under the policy. Appraisal is to determine the "amount," of the covered property ONLY! The Appraisal Clause allows for a less costly mechanism to resolve property disputes by allowing the disputes to be settled out of court. By keeping the process out of a legal and binding litigation, the result is a more timely resolution. The Appraisal Process allows for experts in the field for which the damage is associated, to represent either side. So, an antiques expert can be an appraiser for either side to determine the value of great grandma's bedroom set. As you can see, an attorney is not needed and their is no attorney-client privileges, because it's not a litigation procedure.
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