What is Insurance Appraisal?

Insurance appraisal is the process which places a value on the amount the loss. This process can only be triggered after the insured and the insurer fail to agree on how much it should cost to repair or replace damaged property. Generally in appraisal, conditions provide for the insured, and insurer each to select an appraiser, and for those individuals to select an umpire. If the two appraisers cannot agree upon an umpire, the appraisal provision allows for the court to appoint an umpire. The appraisal panel then will consist of two appraisers, and one umpire. The agreement of the amount of loss of any two on the appraisal panel is binding. The following is an example of the appraisal clause found in some policies:

Appraisal. If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the described location is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.