Understanding the Insurance Appraisal Process

When a dispute arises between an insurance carrier and a policyholder regarding the value of a property loss, the insurance appraisal process offers a structured, contractually backed method to resolve it. This is not to be confused with a real estate or tax appraisal—insurance appraisal is a formal dispute resolution mechanism outlined in many property insurance policies.

What Triggers the Appraisal Clause?

The appraisal clause is typically invoked when:

• The carrier and the insured agree that damage occurred but disagree on the cost to repair or replace.
• Negotiations stall and a formal method of resolving valuation differences is needed.

The Appraisal Panel Structure

An appraisal involves three parties:

• The Insured’s Appraiser
• The Carrier’s Appraiser
• A Neutral Umpire (agreed upon by both appraisers)

Each side appoints a qualified appraiser. If they cannot reach agreement on the value of the loss, an umpire steps in to make the final decision.

Step-by-Step Breakdown

1. Clause is Invoked
   Either party may invoke the appraisal clause in writing.

2. Appraisers Are Selected
   Both sides choose impartial appraisers with relevant experience.

3. Scope of Damage is Determined
   Site inspections, documentation reviews, and estimate development.

4. Panel Collaboration
   Appraisers exchange estimates and attempt to reach an agreement.

5. Umpire Involvement (if needed)
   If the appraisers cannot agree, the umpire reviews both positions and casts the deciding vote.

Why This Matters

The appraisal process helps avoid litigation, reduce legal expenses, and preserve business or client relationships. It provides a defined path to resolution—but only works when handled by appraisers with deep experience in both estimating and dispute strategy.