Insurance appraisal: frequently asked questions

Insurance appraisal is a dispute-resolution process written into most property insurance policies. When the policyholder and the insurer agree the loss is covered but disagree on how much it is worth, either side can demand appraisal. Each side hires its own appraiser, the two appraisers choose an umpire, and an agreement signed by any two of the three sets the amount of loss.

No. Appraisal is narrower. It decides only the amount of loss, uses appraisers and an umpire rather than an arbitrator, and usually involves no formal hearing or legal rulings. Arbitration can decide broader legal issues.

No. Appraisal decides the amount of loss. Questions about whether the policy covers a loss, or whether a policy condition was met, are coverage questions that are generally handled by the insurer, by negotiation, or in court.

Yes. Appraisal is a policy-based form of alternative dispute resolution (ADR). Like mediation and arbitration, it resolves a disagreement outside of court, but it is limited to the value of a covered loss.

Under the typical clause, either the policyholder or the insurance company can demand appraisal in writing once they disagree on the amount of loss.

Send the insurer a written demand that identifies the claim, states that you disagree with the amount of loss and invokes the appraisal provision, and name your appraiser within the time the policy allows. Keep proof of delivery.

Policies and state laws vary. Some set no specific deadline, while the policy's suit-limitation period and any reasonableness requirements may still apply. Review your policy promptly and do not wait.

If the policy contains an appraisal clause and the dispute is over the amount of loss, the insurer is generally bound by it. Insurers sometimes object that the dispute involves coverage. In that case a court may decide whether appraisal goes forward.

An appraiser is selected by one party, investigates the loss and works to reach an agreed amount with the other side's appraiser. An umpire is a neutral third person chosen by the two appraisers, or appointed by a court, who decides only the items the appraisers cannot agree on.

It generally means the appraiser has the knowledge to value the loss and no financial interest or bias that would compromise their judgment. Requirements and court interpretations vary by state.

Yes, within the policy's requirements. Each side picks its own appraiser, but either side can object if an appraiser is not competent or not disinterested.

Either party can usually ask a court in the state where the property is located to appoint one.

Typically each party pays its own appraiser, and the umpire's fee and other appraisal costs are divided equally between the policyholder and the insurer, subject to the policy and state law.

Many appraisals finish within a few weeks to a few months. Larger or more complex losses, or disputes about the process itself, take longer.

An award signed by any two of the three generally sets the amount of loss. Courts may vacate an award only in narrow cases, such as fraud, partiality or an award outside the scope of appraisal.

No outcome is guaranteed. The award can come in higher, lower or close to the insurer's estimate, depending on the evidence. A well-documented estimate gives you the best chance of a fair number.