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Construction Insurance Appraiser – Umpire Provision

Construction Insurance Appraiser – Umpire  Provision

Every homeowner policy and many commercial policies carry a standard Insurance Appraiser /Umpire provision (see below).   After the 1994 Northridge earthquake we provided damage assessment and cost to repair estimates to hundreds of residential and multi-unit commercial structures by serving as the party appraiser (50% insured, 50% insurer) and reached appraisal awards (settlement) in all of those matters. XL Services is a leader in this field.  At one time, XL Services’ was the founder of IDRC (Insurance Dispute Resolution Center) teaching others the skill and methods of the insurance appraisal process.  services_real_estate

Three professionals form the insurance appraisal panel:  Umpire,  Appraiser appointed by the insured, and Appraiser appointed by the insurer. We continue to do this work today, most commonly as the Insurance Umpire, guiding opposing appraisers to reach a just settlement for the parties they represent.

In California the insurance appraisal provision reads as follows:

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 request of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of the request. Where the request is accepted, the appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon the umpire, then, on request of the insured or this company, the umpire shall be selected by a judge of a court of record in the 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 or her and the expenses of appraisal and umpire shall be paid by the parties equally. In the event of a government-declared disaster, as defined in the Government Code,  appraisal may be requested by either the insured or this company but shall not be compelled.


In most states the above provision is the standard language for an Appraisal provision. In California additional language is found:

…Appraisal proceedings are informal unless the insured and this company mutually agree otherwise. For purposes of this section,”informal” means that no formal discovery shall be conducted, including depositions, interrogatories, requests for admission, or other forms of formal civil discovery, no formal rules of evidence shall be applied, and no court reporter shall be used for the proceedings. 

For a more complete explanation of the appraisal process, please see Dr. Vardi’s article Insurance Appraiser and Umpire Assists Insured’s and Insurance Companies Through The Insurance Appraisal Process.