How the Insurance Appraisal Process Works
A plain-English, step-by-step guide to resolving property claim disputes through the appraisal clause.
Insurance appraisal is a dispute-resolution process found in most property insurance policies. When the policyholder and the insurer disagree on the amount of a loss, either can demand appraisal. Each side picks an appraiser, the appraisers choose a neutral umpire, and a written agreement by any two of the three sets the amount of loss.
When is appraisal used?
Appraisal is for disagreements about value: the scope of the damage, repair methods, pricing, depreciation and similar questions. It is generally not used to decide whether a loss is covered, whether the policy is void, or questions of bad faith; those are usually for the courts. Whether appraisers may decide causation (what caused the damage) varies by state and policy wording.
The appraisal process, step by step
- Disagreement on the amount of loss. The insured and the insurer agree a claim exists but disagree on its value.
- Written demand. Either party demands appraisal in writing under the policy's appraisal clause.
- Each side appoints an appraiser, often within 20 days of the demand under common policy forms.
- The appraisers select an umpire. If they cannot agree, often within 15 days, a court can be asked to appoint one.
- The appraisers evaluate the loss separately, inspect and exchange estimates, and try to agree item by item.
- Disputed items go to the umpire, who reviews the evidence and may hold a hearing.
- The award. A written award signed by any two of the three sets the amount of loss.
- Payment. The insurer pays according to the award and the policy terms, subject to any remaining coverage questions, deductibles and prior payments.
What appraisal costs
Under most appraisal clauses each party pays its own appraiser, and the umpire's fee and other appraisal expenses are split equally. Appraisal is usually faster and less expensive than litigation, but it is not free.
How long does appraisal take?
Simple residential claims may resolve in a few weeks once appraisers are appointed. Large or complex commercial losses, or cases that need an umpire hearing, can take several months.
Appraisal vs. mediation vs. litigation
| Appraisal | Mediation | Litigation | |
|---|---|---|---|
| Decides | Amount of loss | Nothing unless both sides settle | Coverage, amount, bad faith and more |
| Decision-maker | Two appraisers and an umpire | The parties, with a facilitator | Judge or jury |
| Binding? | Generally binding on amount, with limited grounds to challenge | Only if a settlement is signed | Yes, subject to appeal |
| Typical cost and time | Moderate; weeks to months | Lower; days | Highest; months to years |
State rules matter
Appraisal is a creature of contract and state law. Some states set out appraisal procedures by statute or regulation, others leave them to the policy and the courts, and Iowa licenses appraisers and umpires (see the Iowa guide). Always read the specific policy and confirm the current rules in the state where the property is located.
Frequently asked questions
Who can demand insurance appraisal?
Under most appraisal clauses, either the policyholder or the insurer can demand appraisal in writing when they disagree on the amount of loss.
Is an insurance appraisal award binding?
Generally yes as to the amount of loss, although courts may set an award aside for reasons such as fraud, a lack of impartiality, or exceeding the scope of appraisal. Coverage defenses may still apply.
Can I use appraisal for a denied claim?
Appraisal decides the amount of loss, not coverage. If the whole claim was denied for coverage reasons, appraisal may not be available until coverage is resolved, depending on the policy and state law.
Do I need a lawyer for appraisal?
Not necessarily. Many appraisals are handled by appraisers alone. An attorney can help with coverage questions, disputes over the appraisal process, or enforcing an award.