What Does Appraisal Clause Mean?
An appraisal clause, in the context of insurance, is a provision in certain insurance policies that states that a specific resolution or procedure should be followed in evaluating the amount of damage or loss for a certain property. This is especially useful when either the insured or the insurer cannot agree on the terms. Only one of the two parties, and not both, can demand for an appraisal for a damaged property.
Insuranceopedia Explains Appraisal Clause
An appraisal clause aims to protect both the insurer and the insured in the event that an agreement cannot be reached. In cases of fire to property; for example, either the insured or insurer (but never both) can demand for an appraisal of damages to property. If there is a dispute with the actual value of damaged property, the appraisal clause can be invoked and used to determine the correct amount of total damages incurred. In some cases, either party can reject the demand for an appraisal, which can be disadvantageous to the insured.