In an appraisal clause, if the insured and insurer disagree on value after a covered loss, how is the loss value determined?

• A. The insured and insurer each choose an appraiser; the two appraisers select an umpire; any two of the three establish value.
• B. A single appraiser chosen by either party determines the value.
• C. The court appoints three appraisers to decide the value.
• D. The insured’s appraisal is binding if the insurer agrees.

Answer: (A)

When there’s a dispute over the amount of loss, the insurance contract uses an appraisal process to set the value. Each party hires a competent appraiser, and those two appraisers select a neutral umpire. If the appraisers agree, their value becomes the loss amount. If they disagree, the umpire helps settle it, and the final figure is determined by any two of the three individuals. This mechanism focuses on fixing the money value of the loss without immediately addressing coverage or liability, and it provides a built-in, impartial path to resolution.