What does the appraisal clause in an insurance policy say?
Short answer. In a typical homeowners policy, the appraisal clause sits in the property conditions and says that if you and the insurer fail to agree on the amount of loss, either may demand appraisal in writing. It then sets out how the appraisers and umpire are chosen, who pays, and that an amount agreed to by any two of them sets the amount of loss.
Where to find it
Look in the conditions that apply to property coverage, often titled Section I Conditions, under a heading like Appraisal. Then check the endorsements at the back of the policy, because state amendatory endorsements and carrier forms sometimes change the wording.
The typical elements, in plain English
- Trigger: you and the insurer disagree about the amount of the loss. It is not written for disputes about whether something is covered.
- Demand: either side can request appraisal, and the request must be in writing.
- Appraisers: each side picks a competent and impartial appraiser, commonly within 20 days of the written request.
- Umpire: the two appraisers choose an umpire. If they cannot agree within a set period, commonly 15 days, either side can ask a judge in the state where the home is located to choose.
- Process: the appraisers separately set the amount of loss. If they agree, that is the amount. If not, they submit their differences to the umpire.
- Decision: an amount agreed to by any two of the three sets the amount of loss.
- Costs: each side pays its own appraiser and shares the umpire and other appraisal costs equally.
Wording differences to watch for
- Whether the award must state actual cash value and replacement cost separately.
- Whether the insurer keeps the right to deny the claim after an award.
- Any requirement to submit a sworn proof of loss first.
- Whether your form changes or removes appraisal altogether.
Read these against your situation before invoking it. For how this plays out on a roof, see appraisal on roof claims, and if you are weighing options, what to do when a roof claim is denied compares them.