Most property insurance policies include an appraisal clause, a built-in process for resolving disputes over how much a covered loss is worth, without going to court. Appraisal doesn't decide whether something is covered; it only settles disagreements about the dollar amount of a loss both sides already agree is covered.
When Appraisal Applies
Appraisal comes into play when a policyholder and insurer agree a loss is covered but disagree sharply on the value: the scope of repairs, the cost of materials and labor, or the actual cash value of damaged property. Either side, policyholder or insurer, can invoke the appraisal clause once negotiations stall.
How the Process Works
Each side selects its own independent, competent appraiser. Those two appraisers then attempt to agree on the value of the loss. If they can't agree on every point, they jointly select a neutral third party called an umpire. Any two of the three, the two appraisers or an appraiser and the umpire, can sign off on a value, and that figure becomes binding on both sides.
This structure is deliberately designed to be faster and less expensive than litigation. There's no judge, no jury, and typically no depositions, just two qualified appraisers and, when needed, an umpire working through the actual scope and cost of the damage.
The Role of a Neutral Appraiser
Because appraisal only works if the appraisers are genuinely independent, P.L.A.N. Certified appraisers like Catalyst's team can be retained by either a policyholder or an insurer, and can also serve as the neutral umpire when both sides need a tie-breaker. That independence is the whole point: the process only holds up if both appraisers are doing an honest, defensible valuation rather than advocating for whoever hired them.
What to Expect
Appraisal typically moves faster than litigation, often resolving in weeks to a few months depending on the complexity of the loss and how quickly both appraisers can inspect the property and exchange documentation. Each side generally pays its own appraiser, and the cost of the umpire, if one is needed, is usually split evenly. The result is binding, so it's worth having appraisers on your side who know the property, the policy language, and the standards, like IICRC and manufacturer specifications, that a defensible valuation depends on.
Appraisal vs. Litigation vs. Mediation
When a valuation dispute can't be resolved through direct negotiation, a policyholder or insurer generally has three paths: appraisal, mediation, or litigation. Litigation involves filing suit and proceeding through the court system: discovery, depositions, motions, and potentially trial, a process that can take years and cost far more than the disputed amount in some cases. Mediation brings in a neutral third party to facilitate a negotiated settlement, but the mediator has no authority to impose a binding outcome; if either side refuses to move, mediation simply fails. Appraisal sits between the two: like mediation, it avoids the courtroom entirely, but like litigation, it produces a binding result. For disputes that are purely about value, not about whether something is covered, appraisal is often the fastest and least expensive way to reach a resolution both sides are bound to honor.
Preparing for an Appraisal
A well-prepared appraisal moves faster and produces a more defensible number. Before invoking the appraisal clause, gather your complete policy, all prior estimates and correspondence with the carrier, and any documentation of the loss: photos, video, contractor evaluations, and receipts for emergency repairs. Confirm the specific language of your policy's appraisal clause, since the process (and any deadlines to invoke it) is governed by that language rather than by state statute alone. Retaining an appraiser early, before the clause is formally invoked, gives them time to review the file and identify what documentation may still be missing.
Common Misconceptions About Appraisal
"Appraisal means I'm suing my insurance company." Appraisal is a contractual remedy built into the policy itself, not a lawsuit. It's designed specifically to avoid the time and expense of litigation.
"Only the insurer can invoke appraisal." Either party can invoke the appraisal clause once a genuine value dispute exists. It isn't a tool available only to carriers.
"The appraiser I hire will argue for the highest possible number." A competent, independent appraiser, whether retained by a policyholder or an insurer, is bound to produce a defensible, methodologically sound valuation. Advocacy has no place in the role; credibility is what makes the appraisal process work in the first place.