The appraisal process has been used by policyholders and insurance companies to resolve amount of loss issues for many years. Appraisal is a cost effective and efficient alternative to resolve disputes without costly litigation.
Policy language found in appraisal provisions can vary from insurance company to insurance company. In fact, some insurance companies have completely removed the appraisal provision from their policies. It is important to always read the insurance policy when considering appraisal to resolve an amount of loss issue in an insurance claim.
The typical text of the appraisal provision could read as follows:
If we and you disagree on the amount of loss, either may:
Demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. 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 court of record in the state where the "residence premises" is located. The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of the loss.
Each party will:
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