Many property insurance policies include an appraisal clause, a built in process for resolving a disagreement over the dollar value of a covered loss without going to court. If you have never been through it before, knowing the general steps can make the process feel much less unfamiliar.
The process typically begins when one party, either the policyholder or the insurance company, sends the other a written demand for appraisal. This demand usually references the appraisal clause in the policy and states that the party wants to move forward with the process because the two sides have not been able to agree on the amount of the loss.
Once appraisal is invoked, each side typically selects its own appraiser. Most policies require that each appraiser be “competent and disinterested,” meaning qualified to do the work and without a personal financial stake in the size of the award beyond the fee being paid for their services.
The two appraisers then usually work to agree on a neutral third party called an umpire. Depending on the specific policy language, this can happen right away or only if the appraisers later reach a genuine disagreement. If the appraisers cannot agree on an umpire between themselves, many policies allow a court to appoint one.
With an umpire in place, each appraiser typically inspects the damaged property, reviews estimates, photographs, and other documentation, and forms an independent opinion of the loss amount. The two appraisers often exchange their figures and try to reach agreement directly.
When the appraisers agree, that number typically becomes the appraisal award. When they do not, the umpire reviews the positions of both appraisers and the supporting documentation, and an award is usually reached when any two of the three participants, meaning the two appraisers and the umpire, agree on a figure.
The exact procedures, timelines, and level of umpire involvement can vary from policy to policy and from state to state, so the appraisal clause in your own policy is always the best starting point for understanding what to expect.
This article is general education about how the appraisal process commonly works. It is not legal advice, and specific procedures can vary by state and policy. If you are considering appraisal for your own claim, review your policy language and talk with your insurance company, agent, or an attorney familiar with your state’s laws.
Russ Lis is a working property insurance appraiser and umpire based in Minnesota, serving clients nationwide. Have a question about your own claim? Contact Appraisal Resolution.