If the insurer and named insured cannot agree on the amount of loss payment, which process can be invoked?

• A. Mediation
• B. Appraisal
• C. Arbitration by the court
• D. Negotiation with insurer

Answer: (B)

When there’s a dispute about the amount of loss payment, the appraisal process is designed to resolve it. In this process, each side (the insurer and the named insured) selects a competent, disinterested appraiser. These two appraisers compare their estimates and try to agree on a single amount. If they do, that amount is used. If they can’t agree, they jointly select an umpire, and the umpire’s decision, together with the appraisers’ report, becomes the final amount of loss to be paid. Note that appraisal focuses only on the amount of loss, not on whether the loss is covered or on liability; other policy terms remain unaffected. This method is meant to provide a quicker, less formal way to settle disputes without going to court.