A common question people ask before starting the appraisal process is whether the outcome will actually be enforceable, or whether either side can simply walk away from a result they do not like. Understanding how binding an appraisal award typically is can help set realistic expectations going in.
In many states and under many policy forms, an appraisal award is treated as binding on the amount of the loss once it is properly reached, meaning agreed to by any two of the three participants: the two appraisers and the umpire. Courts in many jurisdictions have historically shown a preference for enforcing these awards rather than reopening the underlying valuation dispute.
That said, “binding” in this context typically refers specifically to the dollar amount of the covered loss, not necessarily to every related issue. Coverage questions, such as whether a specific type of damage is covered at all, are usually treated separately from the appraisal award itself.
There are also limited circumstances under which an appraisal award can potentially be challenged, such as claims of fraud, corruption, or a significant procedural irregularity in how the appraisal was conducted. These challenges tend to be narrow and are handled differently from state to state.
Because the binding nature of an appraisal award, and the narrow grounds for challenging one, can vary meaningfully depending on the state and the specific policy language involved, this is an area where reviewing your own policy and talking with a qualified attorney can be particularly valuable if you have concerns.
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.