Claims & Disputes
Appraisal Clause
The appraisal clause provides an alternative dispute resolution mechanism for disagreements about the dollar value of a loss—without going to court.
Last reviewed: May 2026 · Editorial methodology
Definition
The appraisal clause is a standard provision in most homeowners, commercial property, and auto physical damage policies that provides a structured process for resolving disputes about the amount of a loss when the insured and insurer cannot agree. Under a typical appraisal clause, each party selects their own competent, disinterested appraiser; the two appraisers then jointly select an umpire. The appraisers independently assess the loss and, if they disagree, submit their differences to the umpire—the agreement of any two of the three parties on a dollar amount is binding on both the insurer and insured. The appraisal process covers disputes over the amount of loss, not coverage questions (e.g., whether the loss is covered at all). Costs of the appraisal are typically split equally between the parties. The appraisal clause is invocable only when there is a genuine disagreement over value—some insurers improperly delay or refuse to invoke it, which can constitute bad faith. In Florida, SB 2-A (2023) significantly curtailed the appraisal clause's availability and added notice requirements in an effort to reduce litigation abuse. Policyholder advocates and public adjusters often recommend invoking the appraisal clause as a faster, less expensive alternative to litigation.
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Cover Forge USA Editorial Team
Editorial Lead
This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.
Reviewed 2026-06-14
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