Disputes between homeowners and insurance companies over property damage claims are not uncommon. When such disagreements arise, many policyholders are unaware that their insurance policies often contain a provision designed to resolve these conflicts without resorting to litigation: the insurance appraisal clause.

What Is the Insurance Appraisal Clause?

The insurance appraisal clause is a standard component in most property insurance policies. It provides a mechanism for resolving disputes concerning the amount of loss or value of damaged property. Importantly, this clause does not address issues of coverage—that is, whether the damage is covered under the policy—but focuses solely on the valuation of the loss.

In Connecticut, this clause is codified under Conn. Gen. Stat. § 38a-307(1), which outlines the procedure for conducting an appraisal when there’s a disagreement over the value of a loss.

Invoking the Insurance Appraisal Provision

When a dispute arises over the valuation of a claim, either the insured or the insurer can initiate the appraisal process. This involves:

1. Written Demand: The party seeking appraisal must submit a written request to the other party, expressing the desire to engage in the appraisal process.
2. Selection of Appraisers: Each party selects a competent and impartial appraiser to assess the loss independently.
3. Choosing an Umpire: If the two appraisers cannot agree on the value of the loss, they jointly select an umpire. If they cannot agree on an umpire, a court may appoint one.
4. Appraisal Process: The appraisers evaluate the loss and attempt to reach an agreement. If they cannot, the umpire reviews their assessments and makes a binding decision.

This process is designed to be more expedient and cost-effective than litigation, providing a fair resolution to disputes over property damage valuations.

The Role of Appraisers and Umpires

Appraisers are typically professionals with expertise in property valuation, such as contractors or public adjusters. Their role is to assess the extent of the damage and estimate the cost of repairs or replacement. The umpire, acting as a neutral third party, steps in when the appraisers cannot agree, reviewing the assessments and making a final, binding decision.

It’s crucial to select appraisers who are impartial and have no vested interest in the outcome. This ensures the integrity of the appraisal process and the fairness of the final decision.

Enforcing the Insurance Appraisal Clause

In some cases, insurance companies may resist engaging in the appraisal process, especially if they believe the dispute involves coverage issues rather than valuation. However, Connecticut courts have upheld the enforceability of the appraisal clause, even when coverage disputes exist.

For instance, in the case of Klass v. Liberty Mutual Insurance Company(2), the Connecticut Supreme Court affirmed the policyholder’s right to compel appraisal, emphasizing that disputes over the amount of loss fall squarely within the appraisal clause’s domain, regardless of concurrent coverage disputes.

This precedent underscores the importance of understanding and asserting your rights under the appraisal clause, ensuring that valuation disputes are resolved fairly and efficiently.

Disputing Insurance Policy Liability

While the appraisal clause addresses valuation disputes, it’s important to distinguish these from disputes over policy liability, that is, whether the damage is covered under the policy. Issues of coverage are typically resolved through negotiation or litigation, not appraisal.

However, initiating the appraisal process can still be beneficial, as it establishes the value of the loss, which can inform and potentially expedite the resolution of coverage disputes.

Requesting an Appraisal of Property Damage

Understanding the insurance appraisal clause in your homeowners insurance policy is vital when facing disputes over property damage claims. By invoking the insurance appraisal provision, you can engage in a structured, impartial process to determine the value of your loss, potentially avoiding the time and expense of litigation.

If you’re considering initiating an appraisal of property damage or need assistance disputing insurance policy liability, it’s advisable to consult with professionals experienced in insurance appraisal in CT. They can guide you through the process, ensuring your rights are protected and helping you achieve a fair resolution.

Note: This blog post is for informational purposes only and does not constitute legal advice. For specific guidance, please consult a qualified professional.

1. https://www.cga.ct.gov/2021/pub/chap_700.htm#sec_38a-307
   1. In case the insured and this Company shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within twenty days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon such umpire, then, on request of the insured or this Company, such umpire shall be selected by a judge of a court of record in this state in which the property covered is located. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this Company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally.
2. https://jud.ct.gov/lawlib/lawlibnews/Posts/Post.aspx?Id=4794