The appraisal process built into most property insurance policies is often misunderstood by policyholders and, at times, by insurance professionals as well. Clearing up a few common myths can make the process feel less intimidating for anyone facing a disputed claim.
Myth one: invoking appraisal means you do not trust your insurance company, or that you are accusing them of acting in bad faith. In reality, appraisal exists specifically because disagreements over the dollar amount of a loss are common and expected, even when both sides are negotiating in good faith. Choosing appraisal is simply choosing the process the policy itself provides for resolving that kind of disagreement.
Myth two: appraisal decides whether a claim is covered. Appraisal typically addresses only the amount of a covered loss, not whether coverage exists in the first place. Broader coverage questions usually fall outside what an appraisal panel is asked to decide.
Myth three: only policyholders benefit from appraisal. Insurance carriers also use and often prefer appraisal, since it can resolve a valuation dispute faster and less expensively than litigation, while still relying on independent, qualified appraisers rather than one side simply accepting the other’s number.
Myth four: the appraisal process works exactly the same way everywhere. Appraisal clause language, timelines, and procedures can vary meaningfully from policy to policy and from state to state, so what applies to one claim will not always apply to another.
Myth five: once appraisal starts, you lose all other rights under your policy. In many cases, invoking appraisal does not waive other rights or claims a policyholder may have; however, this depends on the specific policy and jurisdiction involved.
Because appraisal rules vary so much by policy and location, it is worth reviewing your own policy’s appraisal clause closely, or asking a qualified professional, before assuming any of the above applies to your specific claim.
This article is general education, not legal advice about any individual claim or policy.
Russ Lis is a working property insurance appraiser and umpire based in the Twin Cities, serving clients nationwide. Have a question about your own claim? Contact Appraisal Resolution.