Appraisal is an ADR or Alternative Dispute Resolution provided in 99% of home and commercial insurance policies. Appraisal is a provision available to the insured and or the insurer to utilize in the event that there is a dispute between the two parties in the dollar amount of insurable loss. This effectively gives the policy holder some leverage as the original insurance adjusters and people involved in the claim are now removed from the equation. This also allows the claim to have two new and impartial people reviewing the loss, one representing you, the insured and one representing the carrier, these people are called appraisers. These two new appraisers are now part of what is known as the appraisal panel. There will be a third member of this panel called an umpire. The two appraisers are charged with selecting and agreeing on this umpire. The umpire will help resolve any differences in the amount of the loss if the two appraisers come to an impasse.
STANDARD APPRAISAL CLAUSE
APPRAISAL - If you and we fail to agree on the amount of loss, either may demand that the amount of loss be set by Appraisal. If either makes a written demand for Appraisal, each shall select a competent, independent appraiser. Each shall notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, you or we can ask a judge of a court of record in the state where the property premises is located to select an umpire. The appraisers shall then set the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any of these three shall set the amount of the loss.