What Is the Insurance Appraisal Clause?
Most homeowners, commercial property, and auto insurance policies contain an appraisal clause—a binding dispute resolution mechanism specifically for disagreements about the amount of a loss. The appraisal process is faster and less expensive than litigation and does not require attorneys (though using one is advisable for large claims). It resolves one specific question: what is the correct dollar amount of the insured loss?
Important limitation: appraisal resolves amount disputes only. Coverage disputes—whether the loss is covered at all—cannot be resolved through appraisal and require separate legal proceedings. If your insurer has denied coverage, invoke your policy's dispute resolution or bad faith procedures rather than appraisal.
How the Process Works
Either party—the policyholder or the insurer—can invoke appraisal when there is a genuine disagreement about the loss amount. After invocation: (1) each party selects a "competent and disinterested" appraiser within a specified period (usually 20 days); (2) the two appraisers attempt to agree on the loss value; (3) if they cannot agree, they jointly select an umpire; (4) an award agreed to by any two of the three is binding and resolves the dispute. Each party pays their own appraiser; umpire costs are shared equally.
Selecting Your attorneysraiser
Your attorneysraiser should be: a licensed insurance professional or experienced contractor with specific expertise in the type of damage being appraised; truly independent (not someone with a financial interest in the outcome); capable of preparing a detailed appraisal report; and willing to appear before the umpire if needed. Public adjusters, licensed appraisers, and retired insurance claims professionals are common choices. The insurer will select their own appraiser—typically an experienced Xactimate estimator or independent adjuster familiar with the insurer's approach.
When Appraisal Is Worth Pursuing
Appraisal is most effective when: there is a genuine, documented difference between your estimate (supported by contractor bids) and the insurer's Xactimate estimate; the gap is large enough to justify appraiser costs ($500–$2,000 each); and the dispute is about scope or pricing rather than coverage. For residential storm damage claims where the insurer's estimate is $30,000 and contractors quote $60,000, invoking appraisal is almost certainly worth it. For disputes involving $2,000–$3,000 differences, the cost-benefit requires more careful analysis.
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Frequently asked questions
Can the insurer refuse to participate in appraisal?
Appraisal clauses are mandatory policy provisions—either party can invoke them, and the other party must participate. An insurer who refuses to participate in properly invoked appraisal is in breach of the policy contract and potentially acting in bad faith. Courts have compelled insurers to participate in appraisal when they attempted to avoid the process.
Does the appraisal award bind me as well as the insurer?
Yes, the appraisal award is binding on both parties for the amount of the loss. You cannot reject the award and then litigate the amount. However, appraisal does not waive any rights related to separate coverage disputes or bad faith claims—only the amount question is resolved. If you receive an unexpectedly low appraisal award, consult an attorney about whether any procedural objections are available.
How long does the appraisal process typically take?
From invocation to award typically takes 30–90 days, depending on the complexity of the loss, appraiser scheduling, and how quickly the appraisers can agree or select an umpire. This is substantially faster than litigation, which can take 12–36 months for a property insurance dispute. The relative speed is one of the appraisal process's most significant advantages for policyholders who need funds to begin repairs.