UMPIRE SERVICES
REVISED 01/01/10
Most insurance policies stipulate or require that if a claim
is filed with the insurance company, both the policy holder and the insurance
company will retain their own adjuster (appraiser) to render a value on the
amount of money that is appropriate to properly repair or
rebuild the building(s), replace or repair building contents, property,
consequential damages including loss or income, living expenses while repairs
are done, etc. Very often, there is a discrepancy between the amount of money
requested by the policy holder and the amount of money that the insurance
company offers to reimburse the policy holder. How to determine which amount is
appropriate has caused the Umpiring Process to be developed.
Many states have realized that it is virtually impossible for judges and/or
juries, with little or no construction knowledge or experience, to make
determinations of the correct amount that should be awarded to a Party on
insurance claims where there is a disagreement between the Owner and the
Insurance Company as to how much the policy holder should be paid for
construction-related items. The Courts, Insurance Commissions, and other
appropriate regulatory agencies and legislatures have come to realize that
having a person with construction experience and cost estimating expertise is a
must in order that a “fair and equitable” award is rendered.
Umpiring is basically an arbitration process whereby an Umpire (Arbitrator),
with construction-related knowledge and expertise, is agreed to by the Parties
to render a fair and equitable award. Although there are many small procedural
differences from state to state, the standard Umpiring process requires the
Parties to submit to the Umpire, their best estimate as to how much each claim
item requires to properly repair or replace the covered items and their best
estimate as to loss of income, cost of living expenses, etc until the residence
or business can again be utilized.
Although the arbitration process typically issues one “Arbitration Award” to
cover all items and issues. The Umpiring process requires two Umpire’s Awards.
One Umpire’s Award will specify the amount submitted by the policy holder that
is closest to the Umpire’s decisions to cover all items and issues and the
second Umpire’s award will specify the amount submitted by the insurance company
that is closest to the Umpire’s decisions to cover all items and issues. The
Umpire can not select an amount in between the Parties numbers but must select
either the exact amount submitted by the policy holder or the exact amount
submitted by the insurance company. (As an example, assume that the item in
question is the amount necessary to cover the cost of the sheetrock and labor.
If the policy holder is requesting $10,000.00 and the insurance company is
offering to pay $3,000.00, and the Umpire determines, with his/her experience
and expertise, that the fair and equitable amount is $5,000.00, the Umpire will
select the insurance company’s amount of $3,000.00, which is only $2,000.00 away
from the Umpire’s estimate which is closer than the policy holder’s estimate
which is $5,000.00 above the Umpire’s estimate.)
At the end of the Umpire’s Hearing, the Umpire will issue two awards; one
listing the items and issues where he/she agreed with the policy holder and one
listing the items and issues that he/she agreed with the insurance company. A
typical arbitration award is signed only by the arbitrator and is final and
binding according to the provisions of the Federal Arbitration Act. In the
Umpiring process, the arbitrator will sign each of the two Umpire’s Awards and
each Party will also sign the award indicating their acceptance of the amounts
specified in their respective award.
This process is a wonderful process in that it requires the Parties to be as
accurate as possible with their estimates. A policy holder trying to make “extra
money” with a high estimate or an insurance company trying to keep costs down by
underestimating their reimbursement amounts will either loose money or have to
pay extra costs as determined by the Umpire.
Unlike a standard arbitration, there are typically more reasons that a Party can
appeal the decision of the Umpire to the courts, insurance commissions, etc but
it is a rare occasion when the appeal body overturns or make corrections to the
Umpire’s Awards.
As in arbitration, the Umpire is precluded from any direct communication with
either Party (commonly known as Ex-parte communications) and as such it is just
as important as selecting a qualified Umpire to select an Umpire who is
affiliated with a firm that specializes in administering the Umpire Process such
as CDRS. As CDRS is the largest exclusive provider of construction-related ADR
(Alternative Dispute Resolution) services in the USA with members of the “CDRS
National Panel of Construction ADR Specialists” located in all 50 states and in
Washington DC (and in many foreign countries on their International Panel), CDRS
is experienced in providing a simple, expeditious and inexpensive but efficient
Umpire process for policy holders and insurance companies to select to handle
their Umpiring Process.
Please keep in mind that CDRS has developed standard processes and forms to be
utilized in administering the Umpire process. CDRS can easily modify any process
or form as agreed to by the Parties or as specified in specific insurance
documents.