The Myth That Appraisal Waives Your Rights

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Few misunderstandings cause more hesitation at the start of a claim than the idea that invoking the appraisal clause somehow gives up rights a policyholder or a carrier would otherwise have. The appraisal process exists precisely because the policy allows it, and invoking a right the policy already grants does not, by itself, extinguish other rights the policy or state law also grants.

Appraisal is a contractual mechanism for resolving disagreements over the amount of loss, meaning how much a covered item of damage is worth to repair or replace, and in many cases how much has already depreciated. It is not designed to resolve whether something is covered at all. Coverage disputes, meaning questions about policy language, exclusions, endorsements, or whether a particular cause of loss is even insured, remain matters for the parties and, if necessary, their attorneys or the courts. An appraiser has no authority to decide coverage and should say so plainly when a coverage question arises during an inspection.

Because appraisal addresses amount rather than coverage, agreeing to it does not typically waive a party’s ability to raise coverage arguments later, though the specific interplay between appraisal and litigation timelines varies by state and by the exact wording of the policy’s appraisal clause. Some clauses specify that invoking appraisal does not waive any policy provision or right; others are less explicit. This is one of the clearest places where the guidance of a licensed attorney, rather than an appraiser, becomes appropriate, since the appraiser’s role is confined to valuing the loss, not interpreting what invoking appraisal legally preserves or forfeits.

A related version of the myth holds that once appraisal begins, a party cannot still negotiate directly or settle informally. In practice, many appraisals are suspended or withdrawn when the parties reach their own agreement before an award is issued. Appraisal is a tool available to either party under the policy, not a one-way door that forecloses every other avenue for resolving amount of loss once it is opened.

What appraisal does resolve, when it runs its full course, is the dollar figure for the disputed damage, memorialized in a written award signed by at least two of the three participants, usually the umpire and one appraiser. That award is generally binding on the amount of loss, subject to limited grounds for challenge such as fraud or a fundamental procedural defect, though again the exact standard for challenging an award differs by jurisdiction. None of that reaches whether the loss was covered in the first place, which is why the appraisal clause and the rest of the policy operate as separate, coexisting provisions rather than substitutes for one another. It is also worth noting that timing questions, such as when a proof of loss must be filed or when a lawsuit must be commenced under a policy’s suit limitation clause, are governed by their own separate provisions and are not automatically paused simply because an appraisal is underway. Some states have addressed how these deadlines interact with a pending appraisal through statute or case law, and others have not addressed the question directly, leaving it to the specific policy language and the facts of the individual claim. A party concerned about how invoking appraisal might interact with any other deadline in the policy should raise that question with an attorney before, rather than after, the demand for appraisal is made.

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.

Russ Lis works nationwide as a property insurance appraiser and umpire, based in Minnesota. Contact Appraisal Resolution.