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.

Where this term matters

Claims Help Center →/claims/homeowners-insurance-claim →/claims/claim-denied →/claims/bad-faith-insurance →/claims/public-adjuster →

Tip

Glossary definitions are educational. Always check your own policy language — insurers can define common terms differently from one another. When in doubt, request a written explanation from your agent.

Related terms

MediationMediation in insurance claims involves a neutral third party facilitating negotiation between the policyholder and insurer to resolve a dispute without litigation or binding arbitration.ArbitrationArbitration is a more formal alternative to mediation in which a neutral arbitrator (or panel) hears evidence from both sides and renders a decision—which may be final and binding.Bad Faith InsuranceInsurance bad faith occurs when a carrier fails to investigate promptly, unreasonably delays or denies a valid claim, or fails to communicate claim decisions—potentially exposing the insurer to damages beyond the policy limits.Public AdjusterA public adjuster works exclusively for the insured—not the insurance company—to document losses, interpret policy language, and maximize claim settlements.Scope of LossThe scope of loss is the comprehensive inventory of all damaged items, affected areas, and required repairs that forms the foundation of a property insurance claim estimate.
Source: Cover Forge USA editorial team|Last verified: May 2026|Methodology
Definitions are educational and may be simplified. Always refer to your policy contract and consult a licensed agent for terms that affect coverage decisions.
CF

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 June 2026

Get Insurance Rate Alerts

We monitor rate filings in all 50 states. Get notified when rates change in your area — and discover new ways to save.

  • ✓State-specific rate change alerts
  • ✓Seasonal enrollment deadline reminders
  • ✓Expert tips to lower your premiums
  • ✓New coverage options in your state

Free forever. Unsubscribe with one click. No spam, ever.

Important Disclaimer

This site provides general educational information only and is not a substitute for professional insurance advice. All rates, data, and coverage details are estimates and may not reflect your actual premiums. Insurance availability and pricing vary by state, insurer, and individual risk factors. Always consult a licensed insurance professional in your state before making coverage decisions.

← Back to Insurance Glossary (355 terms)