What is this article about?
A major loss in mechanical engineering presents complex challenges for both the policyholder and the insurer. Machines are usually expensive capital goods and damage to them can have far-reaching financial consequences – from production downtime to high repair costs and long-term effects on the company. When such a major loss occurs and disagreements arise about the amount of the loss or compensation, so-called expert procedures are often used. This procedure is an important mechanism for finding fair and independent solutions.
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More InformationThis article explains what an expert procedure is, how it works and what role it plays in conflict resolution in claims settlement between insurers and policyholders in the case of major losses in mechanical engineering. Experts guide one party through the claim management process .
What is an expert procedure?
An expert procedure is a fixed dispute resolution mechanism that is often included in insurance contracts – especially in industrial insurance. It is used when, after a loss, there is a disagreement between the policyholder and the insurer about the amount of the loss or the cause of the loss .
Such procedures are particularly important in mechanical engineering, where damage to expensive machines can quickly run into the millions. Policyholders and insurers can have different opinions on claims settlement, i.e. how high the actual damage is, what costs must be reimbursed or whether the repair measures are appropriate. An expert procedure helps to clarify these differences in a factual and objective manner during claims settlement and supports professional claims management.
Amount of damage: Claims management, claims settlement
In the end, every damage is about time and money. For the affected company, it is important that their contracts with customers are honored despite the loss event. At the same time, machines have to be newly procured or refurbished. The options depend very much on the extent of the damage.
For example, if the determined insurance value is higher than the insured sum agreed with the insurer, deductions will result.

The requirements for a “good” settlement are correspondingly “high” on the side of the aggrieved policyholder. Since large losses, as shown in Figure 1, inevitably involve large sums of money, this makes
expert procedure “Sinn”,
if it is not possible to
Insurer and policyholder agree on an expert.
It is also very important that when determining values (current value, market value, insurance value, etc.) in the case of several expert reports in mechanical engineering (machine damage)
always different results emerge,
Since the valuation is by no means so exact, we use simple arithmetic. “1+1” does not automatically have to equal 2 in a valuation. The result can also be 1.9-2.1. This in turn means that if the expected damage is large, usually in the high six-figure range or in the millions,
significant deviations
This is also why the
Expert procedures are always recommended, especially in the case of major damage.
Expert procedure with final claim settlement: When?
An expert procedure becomes relevant when negotiations between the policyholder and the insurer stall and the claim settlement seems to be far off. Typical points of contention in mechanical engineering are often the following:
- Amount of damage : Insurers and policyholders have different opinions about the value (e.g. insured value , replacement value, etc.) of the damaged or destroyed machines.
- Restoration costs : The repair or replacement costs of the machines are controversial.
- Cause of damage : There is disagreement as to whether the cause of the damage is covered in the insurance claim, e.g. whether it is insured machinery damage or wear and tear.

If any of these or similar issues give rise to a dispute, the expert procedure may be requested by a party to clarify the situation with regard to the settlement of the claim.
Legal Basis for Expert Procedures
The expert procedure is regulated by law in Section 84 VVG (Insurance Contract Act) and Section 10 AFB (General Conditions for Fire Insurance). This is an extrajudicial procedure to determine the amount of damage. The prerequisite for this is that you and the insurer agree on the implementation of such a procedure.

Example: General Conditions for Fire Insurance (AFB 2010) - Version April 2014
Section 10 (expert procedure) explicitly states:
- Determination of the amount of damage. After the insured event has occurred, the policyholder can request that the amount of the damage be determined in an expert procedure. The insurer and policyholder can also agree on such an expert procedure together.
- Further findings. The expert procedure can be extended by agreement to include further findings relating to the insured event.
- proceedings before determination. The following applies to the expert procedure:
- Each party must appoint an expert in writing. …
- The insurer may not appoint as an expert a person who is a competitor of the policyholder or has a permanent business relationship with him; furthermore, no person who is employed by competitors or business partners or has a similar relationship with them. …..
Benefit for policyholder (injured party)
In expert proceedings, the injured party can therefore be particularly certain that an expert of his or her confidence will examine the findings of the expert on behalf of the insurance company and deal with them in detail from a professional point of view. This influences the claims settlement and represents more professional claims management in the event of major losses.
costs for experts
Unless otherwise agreed, each party shall bear the costs of its own expert. The costs of the umpire shall be borne equally by both parties.
The costs of the party’s own expert are often covered by insurance. Then your insurer will also pay for the fee of the expert of your trust.
expert procedure
The procedure follows a clearly structured process designed to ensure a neutral and objective assessment of the damage.

Appointment of experts in the expert procedure
At the beginning of the process, both the policyholder and the insurer each appoint their own expert. These experts must be independent and professionally qualified in order to be able to objectively assess the damage. Ideally, they are specialists in the field of mechanical engineering who have both technical know-how and insurance expertise.
examination and assessment of the damage
The two experts then jointly record and analyze the damage. This may involve technical questions such as the condition of the machine before the damage occurred, the nature of the damage, and the options for repair or replacement.
The task of the experts is to assess the damage on the basis of objective facts and to reach an agreement on the extent of the damage or the cause.
Agreement of the experts in the expert procedure
If the two experts agree, their assessment becomes binding for both parties. This ensures that the outcome of the procedure is fair and transparent, as it was developed by neutral experts.
Two appraisals or one joint appraisal?
The two experts in the expert procedure either prepare two separate reports or they can agree on a so-called “joint report” if they want to work closely together. In the case of the “joint opinion”, which is written very often, the umpire is not needed.
Advantages of the expert procedure
The expert procedure is of crucial importance in the case of costly major damage to machinery and equipment for several reasons:
- Objective damage assessment: Expensive major losses often involve complex damage scenarios in which it can be difficult to determine the exact extent and amount of the damage. Another independent adjuster on the policyholder’s side has the expertise and experience to objectively and accurately assess the amount of loss. This is critical to ensure that the policyholder is adequately compensated.
- Transparency: The expert procedure creates transparency in the claims settlement process. It ensures that all parties – the policyholder and the insurance company – have access to the same information and assessments. This minimizes the risk of disagreements and conflicts over the amount of damages.
- Basis for negotiation: The expert opinion prepared by the expert serves as an objective basis for negotiation. Both the policyholder and the insurance company can rely on the expert opinion to support their positions and negotiate claims settlement.
- Dispute resolution: In the event of disagreement over the amount of the loss, the expert procedure may serve as a means of dispute resolution. If both parties accept the expert’s findings, this can help resolve conflicts without having to take the legal route.
- Cost control: For high-cost claims, accurate loss assessment is critical to ensure that the insurance company pays the appropriate compensation. An expert opinion helps to avoid unnecessary costs or undercompensation.
- Accelerated settlement: The expert procedure can help speed up claims settlement by providing a clear basis for negotiations. This is especially important because time is of the essence in restoring business continuity when expensive damage occurs.
Overall, the expert procedure enables fair and efficient claims settlement in the case of expensive fire damage and major damage to machinery and equipment. It helps ensure that the policyholder receives the appropriate compensation and helps prevent disputes and delays in the settlement process.
risks and challenges
Despite the advantages, there are also challenges that can be associated with an expert procedure:
- Costs : The procedure is often associated with considerable costs, as the expert’s fees must be borne by the parties unless otherwise agreed in the contract. However, it is worthwhile in the case of major damage, because the expert’s fees tend to be “very low” compared to the amount of damage and there are always discrepancies between two or more reports on the amount of damage when determining the value of a mechanical engineering project.
- Duration : Although the expert procedure is usually much faster than a court procedure, in complicated cases it can still take some time until an agreement on the settlement of the claim is reached.
- Unpredictable results : Since the experts’ decision is binding, there is a risk that one party may be dissatisfied with the result. There is usually no way to challenge this decision unless formal errors in the procedure are proven.
Conclusion
The expert procedure is a tried and tested and frequently used instrument for dispute resolution in the insurance industry, particularly in the case of major losses in mechanical engineering. It offers objective, fast and technically sound claims settlement when differences arise between the policyholder and the insurer. Despite the potential costs and challenges, the advantages outweigh the disadvantages, as the procedure often enables a straightforward and fair settlement without the need for lengthy legal proceedings.
In the field of mechanical engineering, where damage is often technically complex and financially burdensome, the expert procedure is a valuable way to resolve conflicts efficiently and restore operations quickly.
Recommendation:
The expert procedure always takes a little longer due to two experts. However, it gives the aggrieved policyholder the certainty that two specialists with different principals have dealt with the issue and, in the event of disagreement, the umpire makes a binding decision on the remaining points to be clarified.