The appraisal clause in your homeowner insurance policy is a dispute resolution mechanism that comes into play when you and the insurance company cannot agree on the value of your claim. Each side picks a licensed appraiser, and those two appraisers select a neutral third party (called an umpire) to resolve the disagreement.
The decision reached by any two of the three parties is binding. This process is faster and cheaper than going to court and is a standard provision in most Texas homeowner policies.
When the Appraisal Clause Is Used
The appraisal clause is not for every disagreement. It specifically applies when you and the insurer disagree on the amount of the loss, not whether the loss is covered.
- You disagree with the dollar amount the adjuster assigned to the damage
- The insurer's estimate is significantly lower than your contractor's estimate
- Negotiations have stalled and you cannot reach a mutual agreement on the settlement
- The dispute is about valuation, not about whether the policy covers the damage
- You have already filed a formal appeal and the insurer has not changed their position
How the Appraisal Process Works
The appraisal process follows a specific sequence outlined in your policy. Understanding it helps you navigate the process with confidence.
- You demand appraisal in writing, typically through your attorney or public adjuster
- You pick a licensed appraiser and the insurance company picks their own appraiser
- The two appraisers select a neutral umpire to serve as the tiebreaker
- Each appraiser prepares their own estimate of the loss amount
- The two appraisers and the umpire review the estimates and attempt to agree
- An agreement by any two of the three (your appraiser, their appraiser, or the umpire) is binding
Appraisal vs. Public Adjuster
The appraisal clause is different from hiring a public adjuster. A public adjuster negotiates with the insurance company on your behalf. The appraisal clause is a formal dispute resolution process used when negotiations fail.
Many homeowners use both tools: first hire a public adjuster to negotiate, and if the insurer still will not agree to a fair settlement, demand appraisal to resolve the dispute. The costs of the appraisal process (your appraiser's fee and half of the umpire's fee) are typically borne by you, but the outcome can result in a significantly higher settlement.
