The appraisal clause is one of the most powerful and underused tools available to New York policyholders. When you and your insurer disagree about the amount of a covered loss, the appraisal clause provides a binding resolution process without requiring litigation.
Appraisal applies to disputes about the amount of a covered loss — not disputes about whether coverage exists. If your insurer denies your claim entirely, appraisal is not available. If your insurer accepts coverage but disputes the dollar amount, appraisal is the mechanism to resolve that disagreement.
Either party can invoke appraisal by sending written demand to the other. Each side selects its own independent appraiser. The two appraisers try to agree on the amount of loss. If they cannot, they jointly select a neutral umpire. Any award agreed to by any two of the three is binding. Each party pays its own appraiser; the umpire costs are split.
Your appraiser must be independent. Public adjusters, contractors, engineers, and estimators with relevant expertise are common choices. The quality of your appraiser matters significantly — someone familiar with New York construction costs and estimating software will produce a more credible appraisal.
Before invoking appraisal: exhaust direct negotiation; document the gap between your position and the insurer's in writing; understand the time requirements in your specific policy; and assess whether the disputed amount justifies the cost. For a $5,000 dispute, the math may not work. For a $50,000 dispute, it often does.
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Regulatory resource: New York Department of Financial Services — https://www.dfs.ny.gov. The Insurance Professor provides education only — not legal or insurance advice.