Appraisal Clause
A policy provision for resolving disputes over the amount of loss through neutral appraisers instead of litigation.
When the insured and insurer agree that coverage applies but disagree on the dollar amount of damage, either party may invoke appraisal. Each selects an appraiser; the two appraisers choose an umpire. The award by two of three sets the loss amount subject to policy limits.
Appraisal does not decide coverage issues — only valuation. Courts differ on how strictly to separate coverage from amount disputes.
Examples
After a hurricane, the carrier offers $80,000 for roof and interior damage; the contractor's estimate is $140,000. Appraisal yields $125,000 as the binding loss amount.
Common Misconceptions
Parties try to use appraisal to decide causation or exclusions; that usually belongs in court or coverage investigation. Choosing unqualified appraisers weakens the process.
Related Terms
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