Appraisal is a process built into most property insurance policies for resolving a disagreement over how much a covered loss is worth, not whether the loss is covered at all. Either you or your insurer can invoke it once you agree the damage is covered but disagree on the dollar amount.
What does the appraisal process actually do?
Appraisal exists as a faster, less expensive alternative to a lawsuit when the only real dispute is the size of the check, not whether you have coverage. The Insurance Information Institute (III) describes the process this way: "If you and your insurance company still disagree, your policy allows for an independent appraisal of the loss. In this case, both you and your insurance company hire independent appraisers who choose a mediator. The decision of any two of these three people is binding." Either side can start the process with a written demand. Each side pays for its own appraiser and splits the cost of the umpire (the neutral third person) and any other shared expenses. Because the decision on amount is binding once two of the three agree, most people treat appraisal as a serious step, not a casual negotiating tactic.
Example
After a hailstorm, an insurer's inspector estimates a roof repair at $6,000. The homeowner's contractor estimates the same repair at $11,000, and the homeowner does not think the insurer's number reflects the real cost of materials and labor in their area. Both sides agree the hail damage is covered; they only disagree on the dollar amount. The homeowner invokes appraisal in writing. Each side hires its own appraiser, the two appraisers select a neutral umpire, and the umpire's decision, combined with either appraiser's agreement, sets the final payable amount.
When it applies
Appraisal only resolves disputes over the amount of a covered loss. It cannot force an insurer to cover something the policy excludes, and it cannot resolve a dispute over whether the loss is covered at all; that kind of disagreement goes through the claim, complaint, or legal process instead. Most homeowners and commercial property policies include an appraisal clause, but the exact procedure (how a demand is made, who pays what, and any deadlines) is set by your specific policy and, in some states, by statute, so check your declarations page and policy wording before invoking it.
Related terms
Related: deductible, claim. See also: the insurance appraisal process in Georgia and the appraisal process for a disputed claim amount in Alabama.
Sources
Insurance Information Institute (III), "Settling Insurance Claims After a Disaster." iii.org/article/settling-insurance-claims-after-a-disaster, accessed 2026-07-25.