The Definitive Guide to the Insurance Appraisal Clause

Your property has been damaged. You've filed a claim. But now, you've hit a wall. Your insurance company has made a lowball offer, and they refuse to negotiate further. You know your claim is worth more, but you feel powerless. This is precisely the situation the Insurance Appraisal Clause was designed for.

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Found in most Georgia homeowner and commercial property insurance policies, the appraisal clause is a powerful but often misunderstood tool for resolving disputes over the amount of loss. It is not litigation. It is a binding, non-judicial process to break a deadlock and force a fair settlement.  

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As one of Georgia's leading experts in the appraisal process, Joshua Friedman has prepared this guide to demystify the clause and empower policyholders.

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What is the Appraisal Clause in an Insurance Policy?

The appraisal clause is a condition of your insurance contract. While wording can vary slightly, it typically reads something like this:

 

"If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire... A decision agreed to by any two will set the amount of loss."

 

In simple terms, if you and your insurer disagree on the price of your claim, either of you can demand that a panel of three experts (your appraiser, their appraiser, and a neutral umpire) will determine the final, binding value. It is critical to note that appraisal is for disputes over valuation, not coverage. It answers the question, "How much is this damage worth?" not "Is this damage covered?".

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When Should You Invoke the Appraisal Clause?

Invoking appraisal is a strategic decision. It is most effective when:

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1. There is a significant dispute over the value. If you and your insurer are thousands of dollars apart on a major repair, appraisal is a viable path. It is generally not worthwhile for minor disagreements where the cost of the process might outweigh the potential gain.  

2. Negotiations have completely stalled. You should make a good-faith effort to resolve the disagreement directly with your insurer first. Appraisal is the next step when they refuse to budge from an unreasonable position.

3. The dispute is about scope and pricing, not coverage. For example, your insurer agrees the roof was damaged by wind or hail but will only pay to patch the roof, while your policy demands a like-kind architectural shingle installed to code. This is a valuation dispute perfect for appraisal.
    

How to Formally Invoke the Clause: A Step-by-Step Guide

The process must be initiated formally and in writing.
 

1. Write a Formal Demand Letter: You must send a written letter to your insurance company (specifically to the adjuster handling your claim) formally stating that you are invoking the appraisal clause of your policy. It is best practice to send this via certified mail with a return receipt requested to create a legal record of the date they received it. 
   
   Uncertain how to write this letter?
    

2. Name Your Appraiser: In your letter, you should name your chosen "competent and impartial" appraiser. This shows you are serious and ready to proceed.
    

3. The Clock Starts: Once the insurer receives your demand, they typically have 20 days to name their own appraiser.  
    

Choosing Your "Competent and Impartial" Appraiser: The Most Critical Step

This is the single most important decision you will make in the appraisal process. Your appraiser is your advocate. An effective appraiser is not just a contractor or an engineer; they are a skilled negotiator who is deeply fluent in insurance policy, claims processes, and the specific rules of appraisal.  

Your appraiser must be:

• Competent: They must have demonstrable expertise in valuing property damage.

• Impartial (and Independent): They must be able to make an unbiased assessment. Be wary of appraisers who do significant work for insurance companies, as their loyalty may be divided. An in-house adjuster from the insurance company is not an independent appraiser.  

• An Expert Negotiator: The goal is for the two appraisers to reach an agreement without needing the umpire. This requires a skilled advocate.
   

Joshua Friedman is frequently sought after to act as a policyholder's appraiser due to his dual-license expertise, deep knowledge of construction costs, and proven track record in high-stakes negotiations.
 

The Role of the Umpire: Breaking the Deadlock
Once both sides have chosen their appraisers, the two appraisers must agree on a neutral, third-party umpire. If they cannot agree within a set time (often 15 days), either party can petition a court to appoint one.  
 

The umpire's job is to settle any differences the two appraisers cannot resolve on their own. The umpire reviews the evidence and arguments from both sides and makes a decision. Any award signed by two of the three members of the panel (e.g., your appraiser and the umpire) becomes the final, binding amount of the loss.  
 

Is the Appraisal Award Binding?

Yes. Once an award is signed, it is binding on both you and the insurance company for the amount of loss. The insurer is then obligated to pay that amount under the terms of the policy. There are very limited grounds for challenging a valid appraisal award in court.  
 

Have a Settlement Dispute? Let's Discuss if Appraisal is Your Next Move.

The appraisal process can be a powerful and cost-effective way to end a frustrating dispute with your insurance company. But it must be handled with strategic precision.

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If you are locked in a battle with your insurer over the value of your claim, contact Friedman & Associates today. We will provide a confidential review of your case and advise you on whether invoking the appraisal clause is the right strategy to secure the full settlement you deserve.