The appraisal clause: what to do when you disagree with your insurer's number

What is the appraisal clause?

It is a short paragraph, usually in the conditions section, that sets out a way to settle a dispute about the amount of a loss without going to court. The wording differs between insurers and states, so check your policy for the exact terms, including any deadline for asking.

This guide explains how appraisal commonly works. It is not legal advice, and the rules for appraisal vary by state.

When appraisal fits, and when it doesn't

Appraisal is built for disagreements about value or cost:

• The insurer's repair estimate is far below your contractor's.
• The adjuster priced your belongings below what they cost to replace.
• The insurer took too much depreciation off your belongings.
• You agree the roof was damaged but not on what the repair costs.

It doesn't decide coverage. If the insurer says the loss isn't covered at all, or denied the claim, appraisal won't help. Our guide to an insurance claim that was denied covers that route instead.

How the insurance appraisal process works

1. Either side asks for appraisal in writing, usually after trying to settle the amount.
2. Each side chooses a competent, independent appraiser within the time the policy sets, often 20 days.
3. The two appraisers choose an umpire. If they can't agree, either side can ask a court to name one.
4. The appraisers each value the loss. Where they agree, that is the amount.
5. Where they don't, they take the differences to the umpire. Any two of the three agreeing in writing sets the amount.

The appraisers value the loss item by item, using the same terms as the policy, such as replacement cost and actual cash value. A detailed list of belongings with ages and prices, and a written repair estimate, give your appraiser something solid to argue from.

What appraisal costs

You pay your own appraiser, and you and the insurer usually split the umpire's fee. Appraisers charge by the hour or as a share of the award. Weigh that against the gap you are arguing over:

Appraisal, a complaint or a lawsuit

Appraisal settles the number. A complaint to your state insurance department is the route if the insurer is slow, won't answer or isn't following the rules. A lawsuit is for disputes about coverage, or about how the insurer handled the claim, and needs an attorney.

A public adjuster can act as your appraiser or help you prepare. Our guide to what a public adjuster does explains what they charge. If the dispute is about depreciation, reading the insurer's depreciation schedule line by line is the first step.

Choosing your appraiser

Your appraiser should know how to price the kind of loss you have. A roofer or contractor for a house claim, someone who knows contents pricing for a belongings claim. Most policies require them to be competent and independent, so a relative or someone with a stake in the result is usually not allowed. Ask how they charge, how long it will take, and whether they have worked with your insurer before.

Before you ask for appraisal

• Ask the insurer for its full estimate, line by line, if you don't have it.
• Mark each line you disagree with, and gather a quote, receipt or current price for each.
• Send that to the adjuster and ask them to look again. Many gaps close at this stage.
• Check your policy's appraisal paragraph for the deadline and the notice it requires.
• Keep copies of everything you send and receive.

If the insurer still won't move on the amount, appraisal is the next step. In most cases the award is binding on the amount, though in some states you can still challenge how it was reached.

How long appraisal takes

A simple appraisal can be done in a few weeks. A large or complicated one, with many line items and an umpire involved, can take several months. Delays usually come from choosing the umpire and from gathering the records each appraiser needs. Having your list of belongings, receipts and contractor estimates ready before you ask for appraisal is the best way to keep it short. The insurer pays the award once it is signed, minus anything it has already paid and your deductible.

Where Indemnia helps

Indemnia gives your appraiser the belongings side of the argument: every item with its age, today's replacement price and the depreciation, in a report you can hand over.