What Is Appraisal in Property Insurance Claims?

Insurance Appraisal Simplified


What Is Appraisal in Property Insurance Claims?

When you file a property insurance claim, you and the insurance company must agree on how much it will cost to repair or replace your damaged property. If you both agree the loss is covered but disagree on the amount of the loss, your policy likely includes a dispute-resolution process called Appraisal.

Appraisal helps resolve how much the insurance company should pay — not whether the loss is covered.

When Is Appraisal Used?

Appraisal applies when:

  • The loss is covered, and

  • You disagree with the insurance company’s estimate of repair or replacement costs.

Common reasons for appraisal include:

  • Disagreement over repair scopes

  • Competing contractor or Xactimate estimates

  • Roofing, flooring, or structural pricing disputes

  • Depreciation or replacement-cost issues

Appraisal does not apply to denied claims or coverage disputes.

How the Appraisal Process Works

1. Invocation

You or the insurer can invoke appraisal by sending written notice.

2. Each Side Selects an Appraiser

  • You select a qualified, independent appraiser.

  • The insurance company selects its own.

3. Selection of Umpire

The two appraisers choose a neutral umpire. If they cannot agree, a judge can appoint one.

4. Evaluation of the Loss

Both appraisers inspect the property, compare estimates, review photos, code requirements, and scopes of work.

5. The Award

If both appraisers agree, the amount becomes the binding amount of loss.
If they disagree, the umpire reviews the file and any two of the three must sign the award.

Is the Appraisal Award Binding?

Yes — the amount becomes binding on both parties. The insurer must pay the award, minus deductibles and prior payments.

Appraisal does not determine:

  • Coverage

  • Bad faith

  • Policy interpretation

  • Interest, fees, or penalties (in most states)

Pros of Appraisal

  • Faster than litigation

  • Usually cheaper than court

  • Independent evaluation by experts

  • Helps resolve valuation disputes fairly

Cons of Appraisal

  • You pay your own appraiser

  • Limited ability to challenge the award

  • Does not fix coverage or denial issues

  • Insurers sometimes use it strategically

When Appraisal Makes Sense

Appraisal is often recommended when:

  • The insurer’s estimate is too low

  • You have a contractor or public adjuster estimate

  • Scope, pricing, or materials are disputed

  • The loss involves multiple trades or complex damage

Costs of Appraisal

The appraisal process is usually faster and less expensive than litigation, but it is not free. Each party is responsible for its own costs, and the total cost can vary based on the complexity of the claim.

Below is a clear breakdown of the typical expenses involved:

Your Appraiser’s Fee

You must pay for your own appraiser. Fees vary depending on experience, scope of work, and the size of the loss.

Common fee structures:

  • Flat Fee: A set amount for handling the entire appraisal

  • Hourly: Typically $150–$350 per hour

  • Percentage: Some appraisers charge a small percentage of the final award

  • Hybrid: A reduced flat fee plus hourly or percentage if the case goes to the umpire

Most residential appraisals range from $1,000 to $4,000 depending on complexity.

The Insurance Company’s Appraiser

The insurer pays for its own appraiser.
You have no obligation to pay for the insurer’s appraiser under normal circumstances.

Umpire Fees

If the two appraisers cannot agree, the dispute goes to an umpire.
Umpires are typically experienced contractors, adjusters, or construction experts.

Common costs:

  • Hourly rate: $250–$500/hour

  • Inspection day rate: $1,000–$3,500

  • Administrative or document review fees: Varies

The cost of the umpire is split 50/50 between you and the insurance company.

Additional Costs (If Needed)

In more complex claims, additional expenses may arise:

  • Expert reports (engineering, moisture mapping, roofing, etc.)

  • Cost breakdowns or estimating software runs

  • Site inspections or re-inspections

  • Travel costs (if large loss or remote location)

These costs are optional but sometimes necessary for large or disputed losses.

Attorney’s Fees (If Represented)

Hiring an attorney for the appraisal process is optional.
If you choose to be represented, attorney fees vary:

  • Hourly

  • Flat fee for appraisal

  • Contingency fee (percentage of recovery)

Under many state laws, attorneys are not automatically paid by the insurance company in appraisal disputes unless litigation becomes necessary later.

Total Typical Cost

For most residential claims, the total out-of-pocket cost usually ranges from $1,500 to $4,000 if no umpire is needed.

If the case proceeds to an umpire, the total cost may increase to $3,000–$8,000 depending on the umpire’s involvement.

Is Appraisal Worth the Cost?

Appraisal is often cost-effective when:

  • The insurer’s estimate is far below your contractor’s estimate

  • The dispute involves pricing, scope, or materials

  • The difference in estimates is greater than the cost of appraisal

  • You want a faster resolution without filing a lawsuit

Most policyholders choose appraisal when the dispute is $10,000 or more, but it can be worthwhile in smaller cases depending on circumstances.

Conclusion

Appraisal is a powerful tool for resolving amount-of-loss disputes in property insurance claims. If you believe the insurance company undervalued your claim, our office can help determine whether appraisal is the best option.