Appraisal Demand
A formal invocation of the appraisal clause in a property insurance policy, initiated by either the policyholder or the carrier to resolve disputes over the amount of loss. Once invoked, the clause usually requires both parties to select independent appraisers who then select an umpire if needed.
An appraisal demand is the formal invocation of the appraisal clause in a property insurance policy, used to resolve disputes over the amount of loss. It is often faster and cheaper than litigation but limited in scope to the dollar value of the claim.
Scope of Appraisal
Appraisal clauses are written specifically to resolve disputes about the amount of loss. If the parties agree the claim is covered but disagree on the dollar value, appraisal is the designed path. If they disagree on whether the loss is covered in the first place (cause of loss, exclusions, policy conditions), most courts hold that those disputes are outside the scope of appraisal and must be resolved through negotiation, mediation, or litigation.
The Three-Appraiser Structure
Each party selects a competent, independent appraiser. The two appraisers meet, exchange scopes and estimates, and attempt to agree on the amount. If they agree, that amount is the binding appraisal award. If they disagree, they select a neutral umpire. The decision of any two of the three (either appraiser and the umpire, or the two appraisers) is binding on the amount of loss.
When to Demand Appraisal
Appraisal is effective when the dispute is truly about the amount and the coverage question is already settled. On a roof loss where both sides agree it is a covered wind claim but disagree by $30,000 on the scope, appraisal is the right tool. Where the dispute involves coverage denial, mixed covered and excluded damage, or bad-faith allegations, appraisal often cannot resolve the core issue and other paths are needed.
Frequently asked questions
Appraisal is specifically for disputes over the amount of loss — the dollar value. Coverage disputes (whether the peril is covered) are generally outside the scope of appraisal and must be resolved another way. Policy language varies, but amount-of-loss disputes are the classic appraisal scenario.
Each party selects a competent independent appraiser. The appraisers attempt to agree on the amount of loss. If they disagree, they select an umpire. The decision of any two of the three is binding on the amount of loss. The process is faster and cheaper than litigation but results in a specific amount, not broader relief.
Each party pays their own appraiser. The umpire's fees are typically shared equally between the parties. Costs vary but are generally lower than comparable litigation. Some policies specify different cost-sharing arrangements; read the appraisal clause carefully.
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