Insurance appraisal clause · Missouri
Insurance appraisal clause: settling a dispute over the amount of loss
An insurance appraisal clause lets you and your insurer settle a disagreement over the amount of a loss without a lawsuit. Each side picks an appraiser, the two pick an umpire, and an agreement by any two sets the amount. Appraisal usually decides how much, not whether the loss is covered.
What an appraisal clause is
Many homeowner, business and auto policies have an appraisal clause. It is a section of the policy. It sets out a way to settle a fight over the dollar amount of a covered loss.
The wording differs from policy to policy. Read your own. Most follow the same basic steps described below. This page describes the common pattern, not any one policy.
How appraisal usually works
- You and the insurer disagree on the amount of loss.
- Either side makes a written demand for appraisal.
- Each side picks its own appraiser, often within a short time set in the policy.
- The two appraisers try to agree on the amount.
- If they cannot, they pick an umpire. If they cannot agree on an umpire, many policies let a court pick one.
- An agreement in writing by any two of the three sets the amount of loss.
Most clauses say each side pays its own appraiser and the two sides split the umpire’s cost. Check your policy.
What appraisal decides, and what it does not
Appraisal is built for questions of how much. How many shingles? What does the repair cost? What was the car worth?
It is usually not the place to decide whether a loss is covered at all. If the insurer denied the claim under an exclusion, appraisal may not settle that. See denied insurance claims for that kind of dispute.
Some fights mix both. The cause of damage can affect both coverage and amount. A lawyer can help you decide what to send to appraisal and what to keep for another forum.
When appraisal can make sense
APPRAISAL MAY FIT WHEN
- The insurer agrees the loss is covered, but its estimate is far below yours.
- The dispute is about price, scope or the value of a car or belongings.
- You want a faster, cheaper path than a lawsuit.
THINK TWICE WHEN
- The insurer denied coverage in whole or in part.
- The amount in dispute is small next to the cost of an appraiser and umpire.
- You are unsure what the award will cover, such as depreciation or code upgrades.
After the award
The appraisal award sets the amount of loss. It is not always the amount of the check. The insurer usually subtracts your deductible and what it has already paid. Policy limits still apply.
Some awards list two numbers: replacement cost and actual cash value. If your policy pays the difference only after repairs, you may need to finish the work and send proof before you get it. See underpaid insurance claims for how that works.
Ask the insurer in writing when it will pay the award, and keep a copy of the award itself.
Picking an appraiser
Your appraiser should know the kind of loss: roofs, fire, cars or business income. Many policies say the appraiser must be “competent” and “impartial” or “disinterested.” Read that word in your policy. It can affect who you may choose.
Ask about the appraiser’s fee before you hire. Get it in writing. Keep a file of everything you give the appraiser.
What to do before you demand appraisal
- Get the full policy and read the appraisal clause word for word.
- Get your own written estimates, photos and records together.
- Ask the insurer in writing to explain its number, line by line.
- Decide whether the dispute is about amount, coverage, or both.
- Make the demand in writing, and keep proof you sent it.
Appraisal does not replace your other rights. If the insurer refuses to pay the award, or refused payment without reasonable cause, see the vexatious refusal guide. Harjot Singh Padda, JD can review your clause and explain whether appraisal fits your claim.
Common questions
Can the insurer force me into appraisal?
If the policy lets either side demand it, the insurer can ask for it. Your duties depend on the wording. See mediation and arbitration.
Is appraisal the same as arbitration?
No. Appraisal usually decides only the amount of loss. See mediation and arbitration.
Can I use appraisal on a totaled car?
Many auto policies have an appraisal clause. See total loss vehicle valuation.
Does appraisal decide whether my claim is covered?
Usually not. It decides how much. See denied insurance claims.
Who pays for appraisal?
Most clauses say each side pays its own appraiser and splits the umpire. See the property insurance claims overview.
Related reading
- Property insurance claims overview
- Underpaid insurance claims
- Mediation and arbitration
- Insurance bad faith and coverage disputes
Sources
- Mo. Rev. Stat. § 375.296 (written demand; 30 days before suit; vexatious refusal to pay). Missouri Revisor of Statutes
- Mo. Rev. Stat. § 375.420 (penalty of 20 percent of the first $1,500 of the loss and 10 percent of the rest, plus a reasonable attorney’s fee; automobile liability insurance excluded). Missouri Revisor of Statutes