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Insurance Appraisal Clause and the Appraiser/Umpire

What if, after all you’ve done, you and your adjuster/insurance company are at an impasse on the value of your property? It’s now time to invoke the Appraisal Clause in your insurance policy.

In a recent 2010 Contents water damage claim, The Travelers Insurance Company made an initial offer to my client of $83,359.90. I negotiated a settlement for the client of $170,363.43. So, the settlement agreement exceeds the initial offer by $87,003.53.

I cannot guarantee that your claim will have that same successful outcome. Your claim is entirely different than this example. But that is the kind of outcome possible when you use Russ Longcore as an Appraiser, Claims Consultant or Umpire.


You don’t have to wait until you’re hopelessly deadlocked with the adjuster or insurance company to invoke the Appraisal Clause. The Appraisal procedure has been invoked more often by insurers, who have greater understanding of the terms and conditions of their policies. But you, the insured or policyholder, can do it any time.

I’m not suggesting that you become uncooperative. But occasionally, I talk to people who are having real difficulties with their adjuster or insurance company. The insurance company digs in its heels and will not budge on the value of the claim. They assume a "take it or leave it' attitude about the claim settlement. But, you don't have to accept that.

Many times, invoking the Appraisal Clause stops all the drama.

The Appraisal Clause is found in all insurance policies, and was designed to establish a procedure to allow disputed amounts to be resolved by disinterested parties. The appraisal clause can be found in every homeowners policy, in every policy covering commercial buildings, in all business policies, as well as in every renters policy...even automobile policies.

The Appraisal Clause is usually found in the policy under the Heading “Conditions” and/or “What to do after a loss.”

You must also understand that before you commence litigation against your insurance company, your policy REQUIRES you to go through the Appraisal process FIRST.

Don’t confuse the Appraisal process with Arbitration. The Appraisal Clause does not bind either party to its findings. In arbitration, the findings of the arbitrator are usually binding on both parties.

The Appraisal Clause is meant to be the method for determining disputed values. Appraisal cannot be used to determine what is covered. That is for a court of law to decide. If you have dispute with the company on whether or not something is covered, then you must file a lawsuit against your insurer to get that determination.

In my experience as both an appraiser and an umpire, I’ve found that disputes can be resolved more quickly by appraisal than the resolution you might get with litigation. The cost of the appraisal process is also significantly lower that the cost of litigation.

Here’s what the Appraisal Clause reads in my Homeowner Insurance policy:

“If you and we fail to agree 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 Appraisal Umpire. If they cannot agree upon an Appraisal 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 loss. If the appraisers submit an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the Appraisal Umpire. A decision agreed to by any two will set the amount of loss.

Each party will:

a. pay its own appraiser, and

b. Bear the other expenses of the appraisal and umpire equally.”

Note that the policy requires the appointment of a "competent appraiser." In my opinion, each party should appoint an independent, disinterested appraiser. In past experience, I’ve seen the insured or policyholder appoint the Public Adjuster handling his claim as the appraiser. The PA would likely be a "competent appraiser," but is not a disinterested party. Still, the policy only requires a "competent appraiser."

The appraisers evaluate the loss independently. The appraisers can still negotiate and reach an agreed amount of the damages. But, if they cannot agree, they work together to choose a mutually acceptable appraisal Umpire. If the two appraisers cannot agree on the selection of an Appraisal Umpire, either side may appeal to the local court for the appointment of someone to serve in that capacity.

An Appraisal Umpire must also be a disinterested party, and must be impartial, of good moral character and possessing a good reputation. He also must be willing to listen. No umpire should be chosen that has any financial interest in the outcome of the appraisal. Any other consideration other than the hourly rate of compensation for the umpire is not acceptable.

Once the appraisal Umpire has been chosen, the appraisers each present their loss assessment. Often, this involves informal testimony from the parties involved in the claim. To help the umpire gain a more complete understanding of the details of the loss, the appraisers and the umpire sometimes meet at the loss location and review the loss details. The umpire will subsequently provide a written decision to both parties. If any two parties agree to the amount of the loss, that amount becomes the claim amount. However, if one of the parties does not agree, then the case can still be turned over to legal counsel for litigation.

Question: May the insured or insurer reject the other parties’ choice of appraiser?

Answer: In 2005, the New York Department of Insurance issued a ruling on this question as follows:

“Whether an appraiser appointed by either of the parties is competent and disinterested (or "independent") is a question of fact for a jury and is outside the determination of this Department.”


Notice that there are very specific time limits in the Clause. You MAKE SURE that you choose your appraiser and notify the adjuster within the time limit in your policy. The time limit for both appraisers to choose an Appraisal Umpire begins on the day that both sides choose their appraiser.

Watch very carefully to see if the insurance company and/or adjuster chooses their appraiser within that time limit. If they do not, they have violated the terms and conditions of their policy. You can file a complaint with your state's Department of Insurance for Unfair Claims Practices violations. The insurance company could be subject to penalties and fines, as well as violating their insurance contract between themselves and you.

My recommendation, in the event of an appraisal, is to call a Claims Consultant to be your Appraiser or Appraisal Umpire.

I am a Claims Consultant. My hourly rate as a Claims Consultant is $175.00 per hour plus expenses.


My hourly rate to perform as an Appraiser is $200.00. Appraisal services are rendered at a $2,000 minimum. The travel hourly rate is reduced to $50 per hour to and from loss or $500 max (whichever is less), plus any related expenses (airfare, hotels, postage etc.). These fees shall be payable by the Client regardless of the outcome of Appraisal Award. Payments are as follows; $2,000.00 retainer and remaining balance within 30 days of signed Appraisal Award.

Appraisal Umpire

My hourly rate for Umpire services is $200.00. Umpire services are rendered at a $1,000 minimum. The travel hourly rate is reduced to $50 per hour to and from loss or $500 max (whichever is less), plus any related expenses (airfare, hotels, postage etc.). These fees shall be payable by the Insurer and Insured, to the Umpire regardless of the outcome of Appraisal Award. Payments are as follows; $500.00 retainer by each party if and when the appraisers request the services of the Umpire and remaining balance within 15-days of receipt of the invoice once the Award is signed by two parties of the panel.

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You could retain an attorney to be your Umpire, but you could find yourself paying $250 per hour or more. It is not necessary that an attorney preside over an Appraisal process. If you wish to use an a attorney, then you must only select an attorney that knows the claims process, as well as property valuation and how to estimate or appraise property. The negotiating skills of an attorney are not nearly as important in an Appraisal as a deep understanding of the claims process and estimating.

You might also consider contacting a Public Adjusting company in your area. The Claims Consultant or PA know insurance policies, know the Appraisal Clause, and know how to accurately estimate and evaluate property.

The Claims Consultant or PA are the perfect choices for helping you prove the values of the property of your claim.

For more information, click on the "Contact Us" nav button to the left and leave me an email message. We will first discuss your claim to determine if you need to invoke the Appraisal Clause, and if so, the steps to take to be successful in the deliberation.

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