Appraisal Clause

What Does Appraisal Clause Mean?

An appraisal clause, in the context of insurance, is a provision in certain policies that outlines a specific procedure for determining the amount of damage or loss to property. This clause is particularly useful when the insured and the insurer cannot agree on the valuation of the loss. Only one party, either the insured or the insurer, can request an appraisal for the damaged property, not both.

Insuranceopedia Explains Appraisal Clause

An appraisal clause is designed to protect both the insurer and the insured when an agreement cannot be reached regarding the value of damages. For example, in cases of fire damage to property, either the insured or the insurer (but never both) can request an appraisal of the damages. If there is a dispute over the actual value of the damaged property, the appraisal clause can be invoked to determine the correct amount of total damages incurred. These disputes come up often after large property losses like fires or hurricanes, so claim-handling reputation is worth checking when comparing homeowners insurance companies. In some instances, either party may reject the demand for an appraisal, which could be disadvantageous to the insured. Appraisal clauses also come up in auto insurance, especially when the insurer and the insured disagree on a vehicle’s value after a total loss.