The Appraisal Clause also known as The Appraisal Provision is found in the “Conditions” and/or the “What to do after a loss” section(s) of the policy.
This clause is used to resolve a dispute when an insurance company and policyholder disagree on the amount of damage and/or scope of loss caused by a covered event and/or the amount of payment to settle a claim.
The two parties that are represented in the Appraisal are called the Principals. They are the Principals to the Insurance contract. On one side is the Policyholder, or the Insured. On the other side is the Insurance Carrier, or the Insurer.
Either the Carrier or the Policyhoder can invoke Appraisal. Each side appoints their own Appraiser. The Principals are responsible for the costs incurred for their own Appraiser. The two Appraisers choose an Umpire. If they cannot agree on the amount of loss then the Umpire is brought in to reslove the issues. The Umpire fee and related costs are split evenly between the two Principals. The three of them (2 appraisers and 1 Umpire) make up the “Appraisal Panel“.
Appraisal is considered an Alternative Dispute Resolution . The Appraisal process can be used to help the parties involved reach an amicable solution. Appraisal is a form of dispute resolution that does not involve going to court and does not always require the assistance of a lawyer. Appraisal has several advantages over litigation including cost savings, privacy and faster resolution of your insurance claim dispute. While Appraisal is not suitable for every dispute, it can be a useful tool in reaching a satisfactory resolution.
Author Brad Hays
