The Insurer's Shell Game: Why "You Can't Appraise Scope" Is a Myth Designed to Underpay Your Claim
- Joshua Friedman
- Aug 22
- 10 min read
You have suffered a significant property loss. You have navigated the initial shock, documented the damage, and filed your claim in good faith. The insurance company’s adjuster has inspected the property and agrees that the damage is covered by your policy. Yet, the settlement offer that lands in your inbox is a fraction of what is required to make you whole. When you challenge the valuation and suggest using the policy's own mechanism for resolving such disputes—the insurance appraisal clause—you are met with a dismissive and utterly maddening response: "We can't appraise scope."
This statement is not a neutral declaration of fact. It is a calculated strategic maneuver, a linguistic trick designed to seize control of your claim, artificially limit your financial recovery, and ultimately wear you down until you accept an inadequate settlement. The insurer’s argument is a form of psychological warfare, engineered to create confusion and sow doubt about your contractual rights. By introducing a complex, seemingly legalistic distinction between "scope" and "price," they leverage the inherent information imbalance between a massive corporation and a policyholder facing a crisis. This manufactured complexity is not intended to clarify your policy; it is designed to muddy the waters, making the path to a fair settlement appear so legally treacherous that you capitulate out of sheer exhaustion.
This article will dismantle that argument. We will demonstrate that the standalone word "scope," as wielded by insurers, is a fiction that does not exist in your policy’s definitions. The true power of the appraisal process lies in its authority to determine the entire "amount of loss," a figure that inextricably includes both the full extent of the damages (the scope) and the cost to repair them (the price). We will arm you with the legal precedent and strategic knowledge to fight back against this industry-wide hoodwink.
The Anatomy of a Word: Deconstructing the "Scope" Fallacy
The insurance industry's argument hinges on isolating a single word and imbuing it with a meaning it does not possess on its own. This tactic is a direct violation of fundamental principles of contract law, particularly the doctrine of contra proferentem, which dictates that any ambiguity in a contract should be interpreted against the party that drafted it—in this case, the insurance company.
"Scope" is Never Alone
We challenge you to find the word "scope" as a standalone, defined term in your insurance policy. You will not find it. The word only derives meaning from its context, always appearing as part of a larger phrase: the scope of loss, the scope of repairs, or the scope of coverage. The insurer's sleight of hand is to treat the isolated word "scope" as a synonym for "coverage." They correctly argue that an appraisal panel cannot decide coverage questions—that is a matter for the courts. By deliberately conflating the factual scope of the damage with the legal scope of coverage, they attempt to re-label a simple valuation dispute as a complex coverage issue, thereby blocking your right to appraisal.
Defining the Real Term: "Scope of Loss"
To counter this fallacy, one must understand the term's true industry definition. A "Scope of Loss" is a comprehensive and detailed document that describes the full extent of damage to a structure. It specifies the amount and type of damage, the quantity and quality of materials required for restoration, and the current, localized costs of both materials and labor needed to return the property to its pre-loss condition, including any work mandated by modern building codes.
This is fundamentally different from the typical adjuster's "estimate," which is often little more than a preliminary offer to settle, based on a cursory inspection and inputs designed to minimize the payout. While both a public adjuster and a company adjuster may use the same software, such as Xactimate, the final valuation is determined by the data entered. An insurer’s estimate might omit necessary line items, specify "repair" for items that require full replacement, or ignore code-required upgrades. The battle is not over the software; it is over the inputs—and those inputs are the scope of loss.
The Appraisal Clause: Unlocking Its True Power
The insurance appraisal clause is a powerful alternative dispute resolution tool embedded in most property policies. Its purpose is to provide an efficient, cost-effective, and binding method for resolving disagreements over the value of a loss without resorting to protracted and expensive litigation. The entire mechanism is triggered by a disagreement over one key phrase: the "amount of loss."
Analyzing the Key Phrase: "Amount of Loss"
The term "amount of loss" is an indivisible equation with two essential variables: quantity and price.
Quantity (The Scope of the Damage): What items were damaged, and what is the full extent of the work required to repair or replace them? How many square feet of drywall must be removed? Does the entire roof need to be replaced to ensure a uniform appearance?
Price (The Cost of the Damage): What is the fair market cost, in this specific location at this specific time, for the labor and materials identified in the scope?
It is logically impossible to determine the "amount of loss" by addressing only the price. A price without a corresponding quantity is a meaningless number. Therefore, determining the full and accurate scope of repairs is not an optional or secondary task for an appraiser; it is a fundamental and non-negotiable component of their duty.
The Insurer's Misdirection: Severing Scope from Price
The insurer's core tactic is to tear this equation in half. They present their own deficient scope of repairs and insist that the appraisal panel is restricted to applying pricing only to the items on their list. This strategy retains unilateral control over the most critical part of the claim valuation. If an insurer can dictate the scope, they control the ultimate payout, regardless of the appraiser's pricing. Forcing a policyholder to accept their limited scope transforms the appraisal process from an independent valuation into a simple pricing exercise on the insurer's terms, rendering the clause effectively useless for the insured.
Consider these common scenarios:
Hail Damage: An insurer agrees a hailstorm is a covered loss but their scope only includes replacing 50 damaged shingles. Your expert roofing contractor confirms that due to the age and type of shingle, a patch repair is impossible and the entire roof slope must be replaced. The insurer dismisses this as a "scope dispute" and refuses to let the appraisal panel consider the full replacement cost.
Water Damage: A burst pipe soaks a kitchen, damaging custom-built wood cabinets. The insurer's scope calls for sanding and re-staining the cabinet faces. A master cabinetmaker, however, confirms the underlying particleboard is swollen and structurally compromised, requiring complete replacement. The insurer frames this as a "scope issue" outside the appraiser's authority.
Like-Kind-and-Quality/Uniform Appearance: A windstorm damages a portion of a home's vinyl siding. The original siding is no longer manufactured. The insurer offers to pay only for the damaged section, resulting in a mismatched, patchwork repair. They argue that the requirement to replace the undamaged siding for a "reasonably uniform appearance" is a coverage question, not a valuation one—a position that has been explicitly rejected by the courts.
The Legal Precedent: How Courts Are Piercing the Veil
Fortunately, state and federal courts are increasingly recognizing this "scope vs. price" argument as a bad-faith tactic designed to circumvent a contractual obligation. Insurers in states like Georgia misapply cases like Lam v. Allstate (a disastrous default judgment that even defense attorney law blogs know is weak in this instance) as their Bible for rejecting appraisal, when cases like Bell v. Liberty Mutual and Clary v. Allstate are actually the more relevant precedent. Meanwhile, a growing body of case law has affirmed that appraisal panels have broad authority to determine the full amount of loss, which necessarily includes factual determinations about causation and the extent of damages.
Scope of Loss vs. Scope of Coverage: The Bright Line Drawn by the Courts
The distinction between the "scope of loss" and the "scope of coverage" is critical, and insurers frequently exploit the ambiguity between them.
Scope of Coverage is a legal question answered by the policy's language. It asks: Is this type of damage covered at all? For example, is flood damage excluded? This is a question for the courts, not appraisers.
Scope of Loss is a factual question answered by inspecting the property. It asks: What is the full extent of the damage caused by the covered event? This is a question of valuation.
The Georgia Supreme Court, in McGowan v. Progressive Preferred Insurance Co., drew a clear line, holding that appraisal "can only resolve a disputed issue of value" and "cannot be invoked to resolve broader issues of liability." The appraisal clause, the court affirmed, does not exist to address an insurer's potential liability for claims made in a lawsuit; its sole purpose is to determine the "amount of loss."
This is where the insurer's abuse of the word "scope" becomes most apparent. When a disagreement is overwhelmingly about the amount of loss (e.g., the cost and method of repairs), an insurer will often try to block appraisal by hiding an unstated coverage dispute—a tiny needle—in a very large haystack of pricing and quantity issues. They will say, "Sorry, you are trying to appraise scope here," effectively manufacturing a coverage dispute to avoid their contractual obligation to appraise. This tactic is wholly abusive because the biggest disagreement in most claims is the scope of necessary repairs, not the price per unit.
If this tactic were allowed to stand, the appraisal process would be rendered meaningless. As one court noted, "Were such doubts not resolved in favor of appraisal, insurance companies could avoid appraisal obligations merely by claiming that the dispute concerned coverage." The rule is simple: once an insurer agrees a covered loss has occurred, any dispute over the "amount of loss" must proceed to appraisal if demanded.
The Foundational Question: Causation
The legal debate often centers on causation. Insurers contend that determining the cause of damage is a coverage issue reserved exclusively for the courts. However, courts are pushing back, acknowledging that for appraisal to function, appraisers must be able to distinguish between damage caused by a covered event (like a hailstorm) and damage from other sources (like pre-existing wear and tear). This is not a legal interpretation of the policy; it is a factual finding essential to valuation. As the U.S. Court of Appeals for the Tenth Circuit aptly noted, "Any appraisal necessarily includes some causation element," because an appraiser asked to value hail damage does not include the cost of fixing a leaky faucet in their award.
This judicial pushback is not a coincidence. The systemic abuse of the appraisal process by insurers has forced courts to intervene and restore the mechanism to its intended purpose. The fact that some insurers have rewritten their standard one-paragraph appraisal clause into a three-page treatise is a direct admission that they are losing this battle in the courtroom and are now attempting to win it through convoluted contract language.
A Tide of Favorable Rulings
Several landmark cases illustrate this clear legal trend:
Mesco Mfg., LLC v. Motorists Mut. Ins. Co.: The Seventh Circuit affirmed that appraisers can determine the cause of loss when establishing the amount of loss, explicitly rejecting the notion that an insurer can simply disregard the factual findings of a valid appraisal panel.
Walnut Creek Townhome Ass'n v. Depositors Ins. Co.: The Iowa Supreme Court held that appraisers inherently determine causation when valuing the "amount of loss." An appraiser tasked with valuing "storm damage" is factually concluding that a storm caused the damage.
Klass v. Liberty Mutual Insurance Company: In a decisive victory for policyholders, the Connecticut Supreme Court issued a unanimous, precedential opinion—reported by the National Association of Public Insurance Adjusters (NAPIA)—confirming that the "scope of damage is subject to appraisal on a covered loss." The court unequivocally rejected the carrier's attempt to re-label a dispute over matching siding as a "coverage" question, ruling that determining what is necessary to achieve a "reasonably uniform appearance" is a core component of the "amount of loss" and therefore squarely within the appraisal panel's authority.
This evolving legal landscape is best summarized by comparing the outdated, insurer-friendly view of appraisal with the modern, legally-supported reality.
A Strategic Framework for Winning the "Scope" Battle
Understanding your rights is the first step; enforcing them requires a strategic approach. The "scope" battle is often won or lost long before appraisal is ever invoked. It is won during the initial claim documentation phase, where the party with the most thorough, credible, and defensible Scope of Loss gains control of the entire dispute.
It's Not Just What You Say, It's Who Says It
An appraisal is a contest of expertise. The insurance company will be represented by a seasoned professional—an insurance appraiser who has handled hundreds of these disputes. You must level the playing field by selecting your own competent, impartial, and expert appraiser. This is where a top-tier public adjuster provides indispensable value. They are not just contractors; they are licensed professionals who are experts in policy interpretation, damage valuation, and the intricacies of the appraisal process itself.
Reclaiming Your Right to a Fair Assessment
The notion that "you can't appraise scope" is a carefully constructed myth. It is a strategic fiction, unsupported by your policy's language and increasingly rejected by courts across the country. The "amount of loss" is, and always has been, an inseparable combination of the full scope of damages to the covered property—in most cases the dwelling—and the price required to repair them. You do not have to accept your insurance company's self-serving and unilateral definition of your loss. The appraisal clause is your contractual right to an independent, expert, and binding determination of what you are truly owed.
Leveraging this right, however, requires expertise. The insurance company has a team of professionals working to protect their bottom line. You need an advocate in your corner fighting exclusively for your financial recovery. If your insurer is attempting to dictate the terms of your claim by playing the "scope" shell game, it is a definitive signal that you need professional representation.
Contact Friedman & Associates for a confidential claim review. Our team of expert public adjusters and certified appraisers understands this tactic intimately and knows precisely how to dismantle it. We build ironclad claims based on facts and evidence, ensuring that when you invoke the appraisal clause, it is to determine the true and total amount of your loss.
References
Bonbeck Parker, LLC v. Travelers Indem. Co. of Am., 14 F.4th 1169 (10th Cir. 2021).
Drew Eckl & Farnham, LLP. (2014, May 2). LAM V. ALLSTATE Indemnity Company: Appraisal Provision Does Not Apply To The Scope Of The Loss.
Klass v. Liberty Mutual Insurance Company, 341 Conn. 613, 269 A.3d 1 (2022).
McGowan v. Progressive Preferred Insurance Co., 281 Ga. 169, 637 S.E.2d 27 (2006).
Mesco Manufacturing, LLC v. Motorists Mutual Insurance Company, 89 F.4th 513 (7th Cir. 2024).
National Association of Public Insurance Adjusters (NAPIA). (2022, January 12). Connecticut Supreme Court Rules that Scope of Damage is Subject to Appraisal on a Covered Loss. NAPIA News.
United Policyholders. (n.d.). The Scoop on “Scope” (of loss). Retrieved from https://uphelp.org/claim-guidance-publications/the-scoop-on-scope-of-loss/
Walnut Creek Townhome Ass'n v. Depositors Ins. Co., 913 N.W.2d 80 (Iowa 2018).
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