Appraisal Provision in Insurance Policies

The appraisal provision in a property insurance policy allows the policyholder to hire an independent appraiser to determine the value of their damages. The insurance company will typically also hire their own independent appraiser. The two appraisers will then get select together an umpire. The umpire is basically an arbitrator. If a disagreement between the two appraisers arises, they can present their differences to the umpire who will make a ruling. These three individuals are known as the Appraisal Panel, with the goal to determine the Amount of Loss. The Amount of Loss is the total dollar amount needed to return the damaged property back to original condition, either by repair or replacement.

Appraisers and Umpires

Once the Appraisal Panel is set, the policyholder’s chosen appraiser and the insurance company’s chosen appraiser will review the documents, estimates, and differences. The two independent appraisers will try to discuss and resolve the differences in damage and in cost. The two appraisers will discuss their reasons for their position and try to come to an agreement. Sometimes issues arise where the two independent appraisers can’t agree on certain items. In this event, the two appraisers will submit their difference to the chosen umpire. The three will discuss the issues and try to reach an agreed settlement of the differences. As stated above, the settlement or final number is called The Amount of Loss. The final amount is known as the Appraisal Award.