Understanding the Appraisal and Mediation Process
The appraisal clause is a contractual process used to settle disputes between policyholders and insurance companies. Whether by design or not, insurance companies don’t always notify policyholders of their right to participate in this form to resolve property damage insurance claim disagreements.
If there is a disagreement in the amount of damage and appraisal becomes necessary, you or your insurance company may initiate the appraisal clause, which is usually done in writing. Unlike insurance mediation, the outcome of the insurance appraisal process is binding once an award is signed. However, not all insurance policies contain an appraisal clause.
The appraisal clause may include the following language and is a good explanation of the process:
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 the 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 residence is located to select an Umpire. The Appraiser 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 two of these three shall set the amount of the loss.