Reference
Insurance Appraisal Glossary
Plain-English definitions of the terms appraisers, umpires and policyholders use every day.
- Actual cash value (ACV)
- The value of damaged property at the time of loss, usually calculated as replacement cost minus depreciation. How ACV is measured depends on the policy and state law.
- Amount of loss
- The dollar value of a covered loss. Appraisal is designed to settle disagreements about the amount of loss, not whether the loss is covered.
- Appraisal
- A dispute-resolution process in many property insurance policies in which each side appoints an appraiser and a neutral umpire resolves their differences to set the amount of loss.
- Appraisal award
- The written decision, signed by both appraisers or by one appraiser and the umpire, that states the amount of loss. Many awards itemize amounts such as RCV and ACV by category.
- Appraisal clause
- The policy provision that allows either the insured or the insurer to demand appraisal when they disagree on the amount of loss, and that sets the procedure to follow.
- Appraisal demand
- A written request by the insured or the insurer to resolve the amount of loss through appraisal under the policy.
- Appraiser (insurance)
- A professional appointed by the policyholder or the insurer under the appraisal clause to evaluate and negotiate the amount of a disputed loss.
- Causation
- Whether a covered peril caused the damage. Whether appraisers and umpires may decide causation varies by state and policy wording.
- Competent and impartial
- Wording found in many appraisal clauses describing the appraisers each side must choose. Courts in different states interpret it differently.
- Conflict of interest
- A relationship or financial interest that could affect, or appear to affect, an appraiser's or umpire's independence. It should be disclosed and may require withdrawal.
- Continuing education (CE)
- Ongoing training required to keep a credential or license current. AUA credentials require 14 AUA-approved CE hours every two years.
- Coverage dispute
- A disagreement about whether the policy covers a loss. In most jurisdictions, coverage questions are decided by courts rather than in appraisal.
- Depreciation
- The reduction in value due to age, wear and condition, used to calculate actual cash value from replacement cost.
- Estimate
- An itemized calculation of the cost to repair or replace damaged property, often prepared in estimating software such as Xactimate or Symbility.
- Line item
- A single priced entry in an estimate, such as a quantity of roofing or drywall, used to compare the two appraisers' positions.
- Matching
- Whether undamaged items must be replaced so that repairs reasonably match. Rules depend on policy language and state law or regulation.
- Overhead and profit (O&P)
- Amounts for a general contractor's overhead and profit, often included when a repair requires coordinating multiple trades.
- Public adjuster
- A state-licensed professional hired by a policyholder to prepare, present and negotiate a claim. A public adjuster may or may not also serve as an appraiser, depending on state rules.
- Replacement cost value (RCV)
- The cost to repair or replace damaged property with materials of like kind and quality, without deduction for depreciation.
- Scope of loss
- The description of what was damaged and what work is needed to repair it. Scope disagreements are often the largest driver of appraisal differences.
- Umpire
- A neutral third party chosen by the two appraisers, or appointed by a court, who resolves the items the appraisers cannot agree on.
- Umpire hearing
- A meeting, in person or virtual, in which the umpire hears each appraiser's positions and evidence on the disputed items.