When there is a disagreement between a policyholder and an insurance company regarding the amount of loss or the extent of damage, and negotiations do not lead to agreement, an appraisal clause may be invoked. This process offers a structured and balanced way to resolve valuation differences without litigation.

How It Works:

Invoking the Appraisal Clause

This clause, found in the Conditions section of most property insurance policies, allows either party to request an appraisal when they cannot agree on the loss amount.

Selecting Appraisers

Each party selects a qualified, impartial appraiser within 20 days of receiving a written request. Together, they choose a neutral umpire. If they cannot agree, a judge may appoint one.

Independent Evaluation

Both appraisers independently determine the value of the loss. If they agree, that value is final. If they disagree, the umpire reviews the differences and makes a determination. Any decision agreed to by two of the three participants becomes the final settlement amount.

Cost Allocation

Each party pays for its chosen appraiser and shares the remaining appraisal and umpire costs equally.

Benefits of the Appraisal Process

The appraisal process is typically faster and more cost-effective than legal action. It provides a fair method to settle disputes, supported by professionals who understand both insurance and construction principles.