Arizona Adjuster Practice Exam

What process is used to resolve disputes about the value of a property loss when coverage is agreed upon?

1. Negotiation

2. Mediation

3. Appraisal

4. Litigation

The correct answer is: Appraisal

The correct choice involves understanding the appraisal process, which is specifically designed for resolving disputes regarding the value of a property loss when both parties agree on coverage but cannot agree on the amount of the loss. This method is typically outlined in the property insurance policy and provides a structured way for both the insurer and the insured to select an appraiser. Each party then evaluates the loss, and if there is a difference in opinion on the value, the two appraisers select a neutral third appraiser to help resolve the discrepancy. The decision made through this process is binding, providing a clear and efficient resolution for valuation disputes. Negotiation is often a preliminary step in the claims process but may not formally address disagreements over valuation. Mediation, while an effective dispute resolution process, is more focused on facilitating communication and finding common ground rather than the specific valuation aspect. Litigation, on the other hand, involves a legal process in court, which can be time-consuming and costly, making it less desirable for simply settling a valuation disagreement when the appraisal process is available and more tailored to the situation.