Appraisal Process
The formal dispute resolution procedure outlined in most property insurance policies where each party appoints an appraiser and, if they cannot agree, a neutral umpire decides the claim value. Binding in most states.
What Is the Appraisal Process
The appraisal process is the formal, policy-defined dispute resolution procedure that allows either the policyholder or the insurance carrier to demand an independent valuation of a disputed claim, conducted by two party-appointed appraisers and, if necessary, a neutral umpire whose decision is binding in most states. It is the step between failed supplement negotiations and full litigation. Faster, cheaper, and more focused than a lawsuit, appraisal resolves valuation disputes without addressing coverage questions.
How the Process Works Step by Step
Either party sends a written demand to invoke appraisal. Each side then selects a competent, independent appraiser within the timeframe specified in the policy (typically 20 days). The two appraisers independently inspect the property, review documentation, and attempt to agree on the loss value. If they agree, their joint assessment is the binding award. If they cannot agree, they select a neutral umpire. The umpire reviews both positions and issues a decision. Agreement between any two of the three (either appraiser and the umpire) sets the final amount.
When to Use Appraisal
Appraisal is most effective for valuation disputes in the $8,000 to $75,000 range. Below that, the cost of appraisers and the umpire may not justify the recovery. Above that, litigation may offer the possibility of additional damages (bad faith, penalties, attorney fees) that appraisal cannot award. Appraisal only resolves how much the loss is worth. It cannot address coverage denials, policy interpretation disputes, or bad faith conduct. If the carrier is denying coverage entirely, appraisal is the wrong tool.
Frequently asked questions
The appraisal process typically takes 30 to 90 days from invocation to resolution. Each party selects their appraiser within 20 days (per most policy terms), the appraisers inspect and negotiate, and if they disagree, the umpire reviews and issues a binding decision. Delays usually come from umpire selection disputes.
Either the policyholder or the carrier can invoke appraisal. In practice, it is most often invoked by the policyholder (or their public adjuster or attorney) when the carrier's final offer is significantly below the documented repair cost. The right to invoke is written into the policy language.
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