Escalation
The appraisal clause: binding dispute resolution already in your policy
Most homeowners policies contain an appraisal clause: a binding process for resolving disagreements about the amount of a claim, without going to court. Each side appoints a competent and impartial appraiser, usually within twenty days of a written demand. The two appraisers choose a neutral umpire, and if they cannot agree within fifteen days either party may ask a judge of a court of record in the state to appoint one. An agreement between any two of the three is binding as to the amount of the loss.
Most homeowners have never heard of it, and carriers rarely mention it. It sits in the conditions section of the policy, often under the heading Appraisal, and it is the single most useful escalation route available to a policyholder whose claim is covered but underpaid.
What it is for, and what it is not for
| Appraisal works for | Appraisal does not work for |
|---|---|
| The carrier agrees the hail damaged the roof but will pay for two slopes rather than four | The carrier says the damage is wear and tear, not hail, so nothing is covered |
| The scope omits line items you can evidence | A dispute about which deductible applies |
| A disagreement about the cost of the same agreed work | A dispute about how much has already been paid |
| A gap between two credible estimates | An allegation that the carrier handled the claim in bad faith |
The distinction is coverage against amount. Appraisal decides how much. It does not decide whether. If your carrier has denied the claim outright on causation, then appraisal is usually the wrong instrument and may not be available to you at all, and the right next steps are a written appeal citing the policy language relied on, a complaint to your state insurance department, and advice from a policyholder-side attorney.
The sequence, in order
- Confirm your policy contains an appraisal clause and read its exact wording, including the deadlines it sets.
- Exhaust the cheaper steps first: a written supplement with specific line items, a request for the written basis of any refusal, and a reinspection.
- Get your own credible, itemised estimate so the gap is documented rather than asserted.
- Serve a written demand for appraisal, keeping proof of delivery.
- Appoint a competent and impartial appraiser. Someone with a contingent interest in the outcome is not impartial and can be challenged.
- The appraisers select an umpire, or a court appoints one on request.
- The award issues. Any two of the three agreeing binds the amount.
It binds you too. An award can land below the carrier's existing offer, and you are bound by it.
You pay your own appraiser, and usually half the umpire. Under the standard clause each side pays its own appraiser and the two sides share the umpire's fee equally. None of it is reimbursed by the clause, so on a small gap the process can consume most of what it recovers.
It can foreclose better routes. Entering appraisal on what is really a coverage dispute can waste months and, depending on state law and policy wording, complicate later arguments. Where the gap is large or the issue is causation, take advice first.
A rough economic test
Appraisal tends to make sense when the documented gap is large enough that a percentage-based or hourly appraiser fee still leaves a meaningful recovery, and when the dispute is genuinely about scope rather than causation. On a gap of a few thousand dollars the arithmetic rarely works. On a gap of tens of thousands, with a well-evidenced estimate behind it, it frequently does. That is a judgement about your specific numbers, and it is the kind of judgement worth paying a professional an hour for before committing.