What Does Appraisal Actually Mean


The Insurance Code in every state requires that the appraisal condition be contained in every homeowner or business policy. It is critical for the insured to understand the appraisal process, so they can utilize the process if their insurance company underpays them.

Below is an excerpt from a homeowner’s policy that outlines appraisal:

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.

So, what does appraisal actually mean?

It is actually an independent arbitration. When the insured and the insurance company fail to agree on the amount of the loss. Once the insured exercises the appraisal condition then the insured will name his appraiser and the insurance company will name their appraiser. The cost of the insured’s appraiser is bared by the insured and the cost of the insurance company’s appraiser is bared by the insurance company.  After the two appraisers are named they are responsible for choosing an umpire. Normally, an umpire is not utilized in the process. The umpire is called in only if the two appraisers disagree. If the umpire is called in then the cost of the umpire is split between the insured and the insurance company. If the two appraisers cannot agree on an umpire, then a judge in any district court where the insured lives can name an umpire. Any legal expenses incurred by going to court and asking a judge for an umpire would be split between the insured and the insurance company. The purpose of appraisal is to secure an impartial settlement of the dispute.  An impartial and nonpartisan umpire will be selected to give equal justice to all parties involved. The term disinterested party may be used to describe an umpire.

In actuality, appraisal is used to provide a simple, fair, and inexpensive method to determine the amount of the loss. In the event that a lawsuit is filed, and one of the parties properly demands appraisal, a judge in most instances will allow the appraisal process. If appraisal is properly carried out, and an award is determined, the amount of loss is binding on the insurer and the insured.

While most policies do not usually address the time constraints of appraisal. Courts have held, in many states, that demand for appraisal must be made within a reasonable time after the loss occurs. Insurance companies must move promptly to determine the amount of loss. Therefore, once an insured or insurer recognizes that an amount of the loss cannot be determined then either party should make an immediate demand for appraisal. Otherwise, the claim could go beyond the statutory limit for a lawsuit. If the appraisal process is not ended and the statutory limit is close to coming up, then a praecipe for a writ of summons must be filed with the court in order to preserve the suit clause in the insurance policy.

If you are in the middle of a property insurance claim, where the amount of the loss cannot be settled, and your property is in Lehigh County, Pennsylvania it may be time to call AAA Public Adjusters of Lehigh County. You can also reach us 24/7 at 800-410-5054.


About AAA Public Adjusters

AAA Public Adjusters, LLC, is a property loss consulting firm headquartered in Philadelphia, PA. Additional offices are located throughout Pennsylvania, New Jersey, Florida, Maryland, Delaware, Virginia, and North Carolina. AAA Public Adjusters have been fighting insurance companies for over 25 years. AAA Public Adjusters, Maximizing Your Claim!