Glossary

Appraisal

A property policy procedure for settling a dispute over the dollar amount of a loss, using two appraisers and an umpire instead of a lawsuit.

Also called: appraisal clause, appraisal process, appraisal provision

Appraisal is the commercial property policy's way of resolving a disagreement about value or the amount of loss without going to court. Under the ISO CP 00 10 loss condition, either side can demand it in writing. Each party picks a competent and impartial appraiser, and the two appraisers choose an umpire; if they cannot agree on one, a judge picks. The appraisers state the value and the amount of loss separately, and an award agreed to by any two of the three is binding on the amount.

Each party pays its own appraiser and splits the umpire and other costs equally. The form also says that going to appraisal does not waive the insurer's right to deny the claim, so appraisal answers "how much," not "is it covered." Courts disagree about how far a panel can go in deciding what damage the covered event caused, and state law and policy wording both matter.

Appraisal works best for pricing disputes, such as repair scope or replacement cost, and worst for coverage disputes. It can be quicker and cheaper than litigation, but the award is usually final. Read the guide on the appraisal clause and talk to a public adjuster or an attorney before you demand it.

Last reviewed October 10, 2026

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Related terms

Proof of loss A signed, sworn statement detailing a property loss and the amount claimed, which the policyholder gives the insurer within a set period after it asks. Public adjuster A state-licensed professional hired by the policyholder, usually for a share of the recovery, to document, present and negotiate a property claim. Actual cash value A property valuation basis that pays the cost to replace damaged property minus depreciation for age and wear, not the price of a brand-new item. Replacement cost A valuation basis that pays the cost to repair or replace damaged property with like kind and quality, without deducting for depreciation. Subrogation An insurer's right, after paying a claim, to step into the policyholder's position and recover the loss from whoever caused it.

Related guides

The appraisal clause in commercial property disputes How the appraisal clause settles disagreements over the amount of a property or income loss, what it cannot decide, and Texas and Florida rulings on causation. A restaurant kitchen fire claim, step by step, from first call to final check A hypothetical composite walkthrough of a kitchen fire claim: business income, extra expense, spoilage, coinsurance, proof of loss, appraisal and a timeline. The commercial property claim process, step by step How a commercial property claim moves from first notice to final payment: inspection, scope and estimate, proof of loss, ACV and replacement cost payments. What to do when your business insurance claim is denied A denial is the insurer's position, not the last word. How to read the letter, which deadlines keep running and how to appeal, from reconsideration to suit. Mediation and arbitration in insurance disputes How mediation, arbitration and appraisal differ in insurance disputes, where each shows up in commercial policies, and how to choose a path and keep deadlines. Public adjusters: when to hire one for a business property claim What a public adjuster does, how they are paid, state fee caps and licensing rules, and when hiring one for a large or disputed commercial claim pays off.