The Insurance Journal published an article, For AUP in Claims, Objectivity and Training Expertise is Key, by a Sedgwick executive regarding an insurance term I was not familiar with: Appraisal Under Policy (AUP). No insurance treatise or dictionary of insurance terms provided a definition. It was obvious from reading the article that the author was referring to appraisals:
What is AUP?
It’s not uncommon for someone in the insurance industry to need a refresher on how AUPs are resolved.
AUPs allow insurers and policyholders to seek an impartial resolution when they cannot agree on the amount of loss or damage covered under the policy.
Most insurance carriers have AUP language written into policies that says, in the case of a fundamental dispute about the value of a claim, a policyholder has the right to request an appraisal within a time limit set by the policy.
Policyholders and insurers hire their own expert appraisers to evaluate the damage and assign an AUP adjuster to serve as an appraiser to objectively review the facts of the claim, inspect the property in question, produce a scope and estimate that serve as a tool for negotiation and ultimately help resolve the matter of value that is at question. Both sides agree to an umpire that helps facilitate a settlement if the two designated appraisers cannot arrive at an agreed settlement.
I suppose that when everybody else refers to a cat, somebody can call the cat an “adult kitten” or a “grown-up kitty.” We can figure that out, but it still sounds strange to the rest of us.
I disagree that appraisals are adjustments. Adjustment is what may happen before appraisal. This statement in the article I took exception to because it implies that appraisal is an adjustment:
AUP adjusting is all about finding solutions for providing equitable value on specific damages within claims. The solution may not be exactly what the policyholder or the insurer had in mind—but claims evaluation is a process of adjusting, not exacting. With their objective viewpoint backed by training and expertise, the adjuster serving as an appraiser or umpire is crucial to finding a fair solution.
Appraisal is setting an amount of the loss. It is not an adjustment. It should be a fair process, but the value should be for the full amount valued as the loss under the policy, regardless of whether that figure is a high or low number.
January has three appraisal learning events. I will be one of the instructors at the P.L.A.N. Property Loss Appraiser & Umpire Certification Conference in Naples, Florida. This is a five-day conference from January 13 through January 17.
The Insurance Appraisal and Umpire Association will hold a certification conference in New Orleans on January 15 and 16. I will teach and debate with Steve Badger on the 15th at that conference. Matt Monson and John Minor will be presenting at the conference in the afternoon. Here is the link for the registration.
Finally, everyone should try to attend the Windstorm Insurance Conference to be held in Dallas on January 25-28. Here are links for the Agenda and Registration.
Thought For The Day
Our language is funny – a fat chance and slim chance are the same thing.
—J. Gustav White
