What is the process called when an insured and insurer disagree on the amount of loss?

The process known as appraisal is specifically designed for situations where the insured and the insurer cannot agree on the amount of loss following a claim. This process involves both parties each selecting an appraiser, who then evaluate the loss separately. If these appraisers cannot reach an agreement on the value, they typically appoint an umpire. The decision reached by the appraisers (or with the umpire, if necessary) is generally binding and final for both parties. This structured approach helps ensure an objective evaluation of the claimed damages, which is essential in resolving disputes effectively and efficiently.

In contrast, arbitration involves a third-party arbitrator making a binding decision after hearing both sides but is usually used for broader disputes beyond mere valuation. Mediation involves a neutral third party who helps facilitate a resolution but does not make a binding decision, which differs from the definitive nature of the appraisal process. Negotiation implies a more informal discussion aimed at reaching an agreement, commonly used in initial discussions but not specifically designated to resolve disputes about loss amounts as structured as the appraisal process.