# Appraisal Clause

An appraisal clause is a provision in most property insurance policies that allows either the policyholder or the carrier to invoke a formal, binding appraisal process when they disagree on the value of a covered loss.

## The Middle Ground Between Negotiation and Litigation

**The appraisal clause is a contractual provision in most homeowner's insurance policies that grants either the policyholder or the carrier the right to demand a formal, independent appraisal when they cannot agree on the value of a loss.** The appraisal process is faster and cheaper than filing a lawsuit, and in most states the outcome is binding.

Think of it as the escalation step between a rejected supplement and hiring an attorney. When the carrier's desk adjuster will not budge and you have exhausted your negotiation options, appraisal is the next move.

## How the Process Works

Each side appoints an [appraiser](/content/resources/glossary/appraiser/index.html). The two appraisers independently assess the damage, then attempt to agree on a value. If they cannot agree, they jointly select an umpire. The umpire reviews both positions and issues a binding decision. Agreement between any two of the three - your appraiser and the umpire, or the carrier's appraiser and the umpire - sets the final claim value.

| Step | Who | Cost |
| --- | --- | --- |
| Policyholder's appraiser | Appointed by homeowner | $1,500-$3,000 |
| Carrier's appraiser | Appointed by carrier | Paid by carrier |
| Umpire (if needed) | Selected by both appraisers | Split 50/50, typically $250-$450/hour |

The entire process usually resolves in 30-60 days, compared to 12-18 months for litigation.

## When Appraisal Makes Financial Sense

**Run the numbers before you invoke.** The policyholder is paying their appraiser fee plus half the umpire cost. On a claim where the dispute is $3,000, spending $2,500 on appraisal does not make sense. On a claim where the dispute is $10,000 or more, the math almost always favors appraisal.

The sweet spot is [supplement](/content/resources/glossary/supplement/index.html) disputes in the $8,000-$50,000 range. Below that, negotiation is cheaper. Above that, an attorney may recover more through [bad faith](/content/resources/glossary/bad-faith-claim/index.html) damages and fee-shifting than appraisal alone can deliver.

## What Contractors Need to Know

**You cannot invoke appraisal yourself unless you have an [AOB](/content/resources/glossary/assignment-of-benefits/index.html).** The appraisal clause belongs to the policyholder, not the contractor. Your role is to recommend it, explain the process, and connect the homeowner with a qualified appraiser. The appraiser will need the carrier's original scope, your supplement, supporting photos, and any Xactimate files. Having the claim data in an [ESX file](/content/resources/glossary/esx-file/index.html) rather than a PDF makes the appraiser's job significantly faster and strengthens the review.

## Frequently asked questions

**When should you invoke the appraisal clause?**

The appraisal clause is the step between supplement negotiation and litigation. For claims with $10,000+ in dispute, the math usually favors appraisal over accepting the carrier's offer. It is faster and cheaper than suing the carrier.

**How much does the appraisal process cost?**

Invoking appraisal costs the policyholder an appraiser fee ($1,500-$3,000) plus half the umpire fee ($250-$450/hour). The carrier pays their own appraiser and the other half of the umpire fee.