1. Demand mediation of the claim, prior to taking legal action. The request must state:

a. Why mediation is being requested; and

b. The issues in dispute which are to be mediated.

Only one mediation may be requested for each claim, unless all parties agree to further mediation. A party demanding mediation shall not be entitled to demand or request mediation after a suit is filed relating to the same facts already mediated.

The parties must jointly appoint a mutually acceptable mediator. If the parties are unable to agree upon the appointment of a mediator within seven (7) days after a party has given notice of a demand to mediate the dispute, any party may apply to the JAMS Mediation Service, or such other organization or person agreed to by the parties in writing, for appointment of a mediator.

The mediator will notify the parties of the date, time and place of the mediation conference. This conference will be held within forty five (45) days of the mediation request. If feasible, the conference may be held by telephone.

The mediation shall be conducted as an informal process and formal rules of evidence and procedure need not be observed. Participants must:

(1) Have authority to make a binding decision; and

(2) Mediate in good faith.

2. Demand an appraisal of the loss. In this event, each party will chose a competent impartial appraiser with no financial interest in the outcome of the decision within twenty (20) days after receiving a written request from the other. The two appraisers will chose an umpire. If they cannot agree upon an umpire within fifteen (15) days, you or we may request that the choice be made by a judge of the court of record in the state where the residence premises is located. The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of the loss. A decision agreed to by the appraisers is not binding.

Each party will:

a. Pay its own appraiser; and

b. Bear the other expenses of the appraisal and

umpire equally.

If, however, we demanded the mediation and either party rejects the mediation results, you are not required to submit to, or participate in, any appraisal of the loss as a precondition to action against us for failure to pay the loss.

This seems to be a fairly normal appraisal clause, except for the last sentence. A decision agreed to by the appraisers is not binding. In the appraisal, the differences were presented to the umpire (a retired judge) and an award was issued.

Questions:

1. Does this award set the value of the claim?

2. It appears that the not binding clause applies only to the appraisers. I question this because of the plural word “appraisers.” Because the award was agreed upon by the umpire and one appraiser, does this mean it is binding?

Kentucky Subscriber

The policy provides two ways to settle differences, an appraisal and mediation. An agreement between an umpire and an appraiser is not any more binding than an agreement between two appraisers; had the carrier wanted the decision of the umpire to be binding, they would have said so. While the intent of an appraisal is to set the value, if the insured still disagrees, it appears that he could then request mediation, even after an appraisal had been performed, especially since an appraisal is not binding. So, the appraisal sets the value but is not binding; the insured can still follow through with a mediation request if desired.