Appraisal – A Means to Resolve Disputes About the Amount of Loss

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Almost all homeowners policies contain an “appraisal” clause similar to that in the Standard Fire Insurance Policy.

The submission to the appraisers should be in writing, instructing that the parties do not want hard and fast, arbitrary, or fictitious rules in determining actual cash value, but to consider all evidence presented to them so that their award will serve to fully indemnify or compensate the insured for the actual loss he or she has sustained and at the same time not place him or her in a better position than he or she was in just before the fire.

By the appraisal provision, the insured and the company promise that if they cannot agree as to the amount of loss and claim they can submit their differences to a panel of three impartial arbitrators, called “appraisers.” The decision of the appraisers regarding the amount of loss is binding on both parties.