Claims · Insurance Term
Appraisal Clause (Appraisal Provision)
Definition
The appraisal clause is a policy condition that lets you or the insurer demand a neutral process to settle a disagreement over the amount of a covered loss. Each side picks an appraiser, the appraisers pick an umpire, and an agreement by any two sets the amount.
In Plain English
Appraisal is for disputes about how much, not whether. If you and the insurer agree the damage is covered but disagree on the cost to repair, either side can usually demand appraisal in writing. Questions about whether the policy covers the damage at all are generally left to the insurer, and if needed, the courts.
The process is commonly faster and cheaper than a lawsuit. Each party pays its own appraiser and typically shares the umpire's cost. The appraisers compare their figures, and the umpire resolves the gaps; the award then usually binds both sides on the amount, subject to the policy's other terms.
Appraisal works best with good documentation: a detailed scope of loss, photos, and contractor estimates. Some owners hire a public adjuster or consultant to serve as their appraiser or prepare their side.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: the insurer estimates hail damage to a shopping center at $400,000. The owner's contractor says $650,000. The owner demands appraisal; the umpire sides with the insurer's appraiser on some items and the owner's on others, and the two sign an award of $560,000.
Why It Matters for Texas Property Owners
Texas courts have issued several important decisions on how paying an appraisal award affects later prompt-payment and bad-faith claims, and Chapter 542A adds pre-suit notice rules for weather claims. If your claim is heading toward appraisal or litigation, talk to a Texas insurance attorney about the timing.
What to Watch For
- Read your policy's appraisal clause; some policies differ on timing and scope.
- Pick an appraiser who is truly qualified for commercial losses of your type.
- Keep coverage disputes and amount disputes separate in your correspondence.
- Ask an attorney before demanding appraisal if you also have coverage disputes.
Common Questions
Can appraisal decide whether damage is covered?
Generally, appraisal sets the amount of loss, not coverage. Courts handle coverage disputes, though the line between the two can blur.
Can the insurer still deny a claim after appraisal?
An appraisal award usually settles the amount, but the insurer may still raise coverage defenses under the policy. Your policy's wording and Texas law control.
Sources
Last updated October 14, 2026 · Primesure editorial team · How We Write