What action can be taken if there is a disagreement between an insurer and the insured?

Invoking an appraisal is a process outlined in many insurance policies, particularly in property insurance, designed to resolve disputes over the value of a claim. When there is a disagreement between the insurer and the insured regarding the amount of loss or damage, either party can request an appraisal. This involves both sides selecting appraisers, who then independently evaluate the claim's value. If the appraisers cannot agree, they may then select a neutral umpire to help reach a resolution.

This method is preferred because it is often faster and less expensive than going through legal proceedings, and it is a more collaborative approach that preserves the relationship between the insurer and the insured. The appraisal process is binding, meaning the parties must accept the outcome, which ultimately provides a clear and straightforward avenue for resolving valuation disputes without resorting to litigation or regulatory intervention.

Filing a lawsuit could be a subsequent step if the appraisal process fails, but it is not the first action typically considered. Terminating the policy is an extreme measure that does not directly address the disagreement over a claim. Contacting a regulatory body is usually reserved for issues of non-compliance or unethical practices, rather than for resolving a valuation disagreement between parties.