When is Appraisal Appropriate?

Sometimes there is a disagreement over the insurance company’s valuation of an insurance claim. Policyholders often think the only way to settle the dispute is to hire a lawyer. Fortunately, this is not the case.  Appraisal is a method of Alternative Dispute Resolution often found in many homeowner and commercial insurance policies.

The language will often, but not always, state that appraisal is mandatory when properly demanded by the insurer or insured. It is important to have a qualified appraiser review your policy to determine your options.

When properly executed, appraisal is binding on the parties as to the amount of loss only. Appraisal does not determine coverage. If not properly invoked, employed, and/or carried out the process may not be binding, so it is important to select a qualified appraiser and umpire. Cordo Claims Group prides itself in having certified appraisers and umpires who can handle any size claim. 

What Is The Insurance Appraisal Process?

Appraisal is a policy provision found in the loss settlement section of your policy.  It is an Alternate Dispute Resolution, which can resolve disagreement when the carrier and policyholder do not agree on the amount of loss.  It is an alternative to a lawsuit.  Appraisal does not address coverage issues but can include or exclude items based on causation depending on the state.


Quick – expedient

Relatively less costly

May be less adversarial

No appellate potential

Must pay fees/costs

No firm procedure



Slower – protracted

Generally, more costly

More adversarial

Appeal is possible

May recover fees/costs

Strict procedures

How does the Insurance Appraisal Process Work?

 The appraisal language in a HO3 policy typically reads as follows:

Appraisal. If you and we fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent, appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actual cash value and loss to each item.


The appraisal process requires both the insurance company and the policyholder to hire an appraiser of their choosing to assess the damages and the cost to repair them. Once the appraisal clause/provision is invoked, the insured’s appraiser and the insurance carrier’s appraiser will get together and select an umpire. An umpire is an unbiased, competent third-party individual just in case the insured’s appraiser and the insurance carrier’s appraiser cannot agree on the amount of a claim payment. The two appraisers will then estimate the damage and try to come to an agreement on the amount of loss. 


If the appraisers fail to agree on the amount of the loss, they will submit their differences to the umpire. As with an arbitration panel, the umpire and the two appraisers jointly are considered a “panel.” When at least two of the three panel members agree on the appropriate award, the matter is deemed resolved, and an award is issued to the policyholder.  

Each party will pay its own appraiser and bear the other expenses of the appraisal and umpire equally.

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