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Appraisal Clause Definition

An appraisal clause is a provision in your homeowner’s insurance policy that provides a method for resolving disputes over the amount of loss when you and your insurance company disagree on the value of your roof damage claim. It’s an alternative to litigation that uses neutral third-party appraisers to determine the fair cost of repairs or replacement.

In simple terms: If you think your roof claim settlement is too low and your insurer disagrees, the appraisal clause lets both sides hire experts to determine the fair amount—without going to court.

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Table of Contents

• How the Appraisal Clause Works
• When to Use the Appraisal Clause
• The Appraisal Process Step-by-Step
• What Appraisal Can and Cannot Resolve
• Costs of Appraisal
• Appraisal vs. Other Dispute Options
• Real Colorado Springs Examples
• Common Questions
• Related Insurance Terms

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How the Appraisal Clause Works

The appraisal clause creates a structured process where independent experts evaluate your roof damage and determine fair repair or replacement costs.

Basic Appraisal Principle

Three-person panel:

• Your appraiser: You hire an independent appraiser to represent your interests
• Insurer’s appraiser: Your insurance company hires their own appraiser
• Umpire: If the two appraisers can’t agree, they jointly select a neutral umpire to break the tie

Binding decision:

• When any two of the three agree on an amount, that becomes the binding settlement
• Typically: your appraiser + umpire, or insurer’s appraiser + umpire
• Both parties must accept the decision

What Gets Decided

The appraisal process determines:

• Amount of loss: What it costs to repair or replace damaged property
• Scope of damage: Which components need repair or replacement
• Reasonable costs: Fair market value for materials and labor
• Proper repair methods: Industry-standard approaches

Formula: Appraisal Award = Scope of Damage × Fair Costs

Example:

• Appraisers agree: 28 squares of roofing damaged
• Fair cost: $850 per square in Colorado Springs market
• Appraisal award: $23,800
• Minus your deductible: $2,500
• Insurance pays: $21,300

Why Appraisal Exists

Insurance policies include appraisal clauses to:

• Avoid costly lawsuits: Faster and cheaper than court
• Expert determination: Qualified professionals evaluate technical issues
• Fair resolution: Neutral process for both parties
• Preserve relationship: Less adversarial than litigation
• Binding result: Prevents endless disputes

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When to Use the Appraisal Clause

Disputes That Warrant Appraisal

Valuation disagreements:

• Your contractor estimates $28,000; insurance offers $18,000
• Adjuster says 12 squares damaged; your roofer documents 22 squares
• Dispute over whether repair or replacement is appropriate
• Disagreement about material quality or specifications

Significant financial gaps:

• Difference of $5,000+ between estimates
• Settlement insufficient to complete necessary repairs
• Multiple line-item disputes adding up to substantial amounts
• Negotiations have stalled with no resolution

Good faith disputes:

• Both parties acting honestly but reaching different conclusions
• Technical disagreements about damage extent
• Different interpretations of proper repair scope
• Honest differences in cost assessments

When NOT to Use Appraisal

Coverage disputes:

• Insurance denies claim entirely
• Dispute over whether damage is covered
• Questions about policy exclusions or limitations
• Arguments about whether peril is covered

Bad faith situations:

• Insurance company unreasonably denying or delaying
• Clear violation of policy terms
• Adjuster refusing to acknowledge obvious damage
• Better handled through bad faith lawsuit

Small dollar disputes:

• Difference under $3,000-$5,000
• Cost of appraisal exceeds dispute amount
• Not financially worthwhile
• Better to accept settlement or pay difference

Fraud concerns:

• Suspicion of fraudulent claim handling
• Evidence of deceptive practices
• Need for legal remedy beyond valuation
• Potential for punitive damages

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The Appraisal Process Step-by-Step

Step 1: Invoke the Appraisal Clause

How to start:

Submit written demand:

• Send formal letter to your insurance company
• Reference your policy’s appraisal clause specifically
• State that you’re invoking your right to appraisal
• Send via certified mail with return receipt

Sample language: “Pursuant to the appraisal provision in Policy No. [XXXXX], I hereby formally demand appraisal to resolve the dispute regarding the amount of loss for the claim filed on [date] for roof damage at [address].”

Timeline:

• Insurance company typically has 20-30 days to respond
• They must either agree to appraisal or explain objections
• Process officially begins when both parties agree

Step 2: Select Your Appraiser

Who to choose:

Qualified candidates:

• Licensed public adjusters with appraisal experience
• Experienced roofing contractors familiar with claims
• Professional appraisers specializing in property damage
• Engineers with roofing and construction expertise

What to look for:

• Experience with roof damage appraisals specifically
• Knowledge of Colorado Springs construction costs
• Familiarity with insurance claim processes
• Strong reputation and credentials
• No conflicts of interest

Red flags:

• No appraisal experience
• Unwilling to commit to timeline
• Unclear fee structure
• Conflicts with your insurer
• Poor references or reviews

Cost considerations:

• Hourly rates: $150-$300/hour typical
• Flat fees: $2,000-$5,000 for residential roof appraisal
• Success fees: Some work on percentage basis
• You pay your appraiser regardless of outcome

Step 3: Appraisers Attempt Agreement

Initial assessment phase:

Both appraisers:

• Independently inspect the property
• Document damage extent
• Research fair material and labor costs
• Prepare detailed estimates
• Meet to compare findings

Possible outcomes:

1. Agreement reached: Appraisers agree on amount (case closed—no umpire needed)
2. Partial agreement: Agree on some items, dispute others
3. Complete disagreement: Cannot reach agreement on valuation

What they evaluate:

• Scope: What needs repair or replacement
• Quantity: Measurements and material amounts
• Quality: Appropriate material specifications
• Costs: Fair market pricing for area
• Methods: Proper repair or replacement approaches

Timeline: This phase typically takes 2-4 weeks

Step 4: Select an Umpire (If Needed)

When appraisers can’t agree:

Selection process:

• Your appraiser and insurer’s appraiser jointly choose umpire
• Both must agree on the selection
• If they can’t agree, court may appoint umpire (rare)

Qualified umpires:

• Experienced appraisers or adjusters
• No relationship with either party
• Recognized expertise in property valuation
• Often attorneys specializing in insurance disputes
• Reputation for fairness

Cost:

• Typically $200-$400/hour
• Total cost: $3,000-$10,000+ depending on complexity
• Split equally: You and insurer each pay 50%

Step 5: Umpire Reviews and Decides

Decision-making process:

Umpire’s role:

• Reviews both appraisers’ reports
• May conduct own inspection
• Evaluates evidence and documentation
• Determines fair valuation
• Issues written decision (called an “award”)

Not splitting the difference:

• Umpire doesn’t just average the two estimates
• Makes independent determination of fair value
• May agree with either appraiser entirely
• Or arrive at different number based on evidence

Binding decision:

• When umpire agrees with either appraiser, that’s the award
• Both parties must accept the determination
• Award becomes the claim settlement amount
• Very limited grounds for appeal

Timeline: Umpire typically decides within 30-60 days

Step 6: Award Issued and Claim Settled

Final resolution:

Award document:

• Written decision specifying amount of loss
• Breakdown by component or category
• Reasoning for determination
• Signed by two of three panel members

Settlement calculation:

Appraisal Award: $26,500
Minus Deductible: -$2,500
Minus Previous Payment: -$15,000
Additional Payment Due: $9,000

Payment timeline:

• Insurance must pay within 30 days of award (typically)
• Same payment structure as original claim (ACV then RCV)
• Recoverable depreciation rules still apply

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What Appraisal Can and Cannot Resolve

What Appraisal DOES Resolve

Amount of loss disputes:

• How much damage exists
• Fair cost to repair or replace
• Scope of necessary work
• Reasonable material and labor costs
• Proper repair methodology

Valuation questions:

• Market value of materials
• Fair contractor pricing
• Appropriate quality standards
• Industry-standard practices

Technical disagreements:

• Extent of damage
• Number of damaged components
• Size or quantity of materials needed
• Complexity of work required

What Appraisal Does NOT Resolve

Coverage disputes:

• Whether damage is covered at all
• Policy exclusions or limitations
• Deductible amount
• Depreciation calculations (sometimes—varies by policy)
• Whether peril is covered

Bad faith claims:

• Unreasonable claim handling
• Insurance company misconduct
• Violations of insurance laws
• Punitive damages
• Attorney fees

Causation disputes:

• What caused the damage
• When damage occurred
• Whether damage is new or pre-existing
• Connection between event and damage

Example:

• Can be appraised: “Is the damage $18,000 or $28,000 to repair?”
• Cannot be appraised: “Is this hail damage or wear and tear?”

For coverage disputes, you need different remedies:

• Internal insurance company appeal
• State insurance department complaint
• Lawsuit for breach of contract or bad faith

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Costs of Appraisal

Your Appraiser Costs

Fee structures:

Hourly billing:

• Rate: $150-$300/hour typical
• Inspection: 2-4 hours
• Report preparation: 4-8 hours
• Meetings and negotiations: 2-6 hours
• Total estimate: $1,500-$4,500

Flat fee:

• Simple residential roof: $2,000-$3,500
• Complex or large property: $4,000-$7,000
• Includes all work through award

Contingency/percentage:

• Some appraisers work on percentage of recovery
• Typical: 10-15% of amount recovered beyond initial offer
• Example: Initial offer $18,000, award $26,500 = $8,500 × 10% = $850 fee
• Plus minimum fee even if no additional recovery

Umpire Costs (Split 50/50)

Your share:

• Umpire fee: $3,000-$10,000 total
• You pay: $1,500-$5,000 (half)
• Due regardless of outcome
• Sometimes billed hourly, sometimes flat fee

Total Cost Example

Typical appraisal cost breakdown:

Your appraiser: $3,000
Your half of umpire: $2,500
Total your cost: $5,500

Is it worth it?

• Initial insurance offer: $18,000
• Your contractor estimate: $28,000
• Dispute amount: $10,000
• Your appraisal cost: $5,500
• Appraisal award: $26,000
• Net benefit: $2,500 ($8,000 additional payment minus $5,500 cost)

When Appraisal Costs Are Worthwhile

Good financial sense when:

• Dispute exceeds $7,000-$10,000
• Strong evidence supports your position
• Contractor estimate well-documented
• Clear technical disagreement
• Negotiations have reached impasse

May not be worthwhile when:

• Dispute under $5,000
• Weak supporting evidence
• Marginal case
• Other options available (supplements, appeals)
• Insurance offer reasonably close to fair value

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Appraisal vs. Other Dispute Options

Appraisal vs. Lawsuit

Appraisal advantages:

• Faster (2-4 months vs. 1-3 years)
• Less expensive ($3,000-$8,000 vs. $15,000-$50,000+)
• Expert decision-makers
• Less adversarial
• No court appearances

Lawsuit advantages:

• Can address coverage disputes
• Can pursue bad faith damages
• Attorney fees may be recoverable
• Broader remedies available
• Public record/precedent

When to choose each:

• Appraisal: Pure valuation dispute, both parties acting reasonably
• Lawsuit: Coverage denial, bad faith, or inadequate offers after appraisal

Appraisal vs. Public Adjuster

Different purposes:

Public adjuster:

• Represents you throughout entire claim
• Handles negotiation with insurance company
• Works before appraisal is necessary
• Contingency fee: 5-15% of total settlement
• May avoid need for appraisal

Appraiser (in appraisal clause):

• Only used when dispute reaches impasse
• Formal dispute resolution process
• One-time engagement for specific dispute
• Fixed or hourly fee
• Binding decision authority

Can work together:

• Public adjuster handles initial claim
• If dispute arises, invokes appraisal clause
• Public adjuster or contractor may serve as your appraiser
• Not mutually exclusive options

Appraisal vs. Internal Appeal

Try internal appeal first:

Before invoking appraisal:

1. Request supervisor review
2. Submit additional documentation
3. Provide contractor estimate and explanation
4. Request re-inspection
5. Exhaust internal processes

If appeal fails:

• Then invoke appraisal clause
• Shows good faith effort
• May resolve dispute without appraisal cost
• Strengthens position if appraisal needed

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Real Colorado Springs Examples

Example 1: Hail Damage Valuation Dispute

Situation:

• May 2024 hailstorm damages roof
• Homeowner’s contractor: $27,500 for replacement
• Insurance adjuster: $18,200 for repairs
• Difference: $9,300

Appraisal process:

• Homeowner invokes appraisal clause
• Each side hires appraiser ($3,200 and $2,800)
• Appraisers disagree, select umpire
• Umpire reviews case ($4,000 total, $2,000 each party)

Outcome:

• Umpire agrees with homeowner’s appraiser
• Award: $26,800
• Homeowner’s cost: $5,200 (appraiser + half umpire)
• Additional insurance payment: $8,600 ($26,800 – $18,200)
• Net benefit: $3,400 after appraisal costs

Example 2: Wind Damage Scope Dispute

Situation:

• Wind storm damages sections of roof
• Insurance: 8 squares damaged, $9,600 estimate
• Contractor: 18 squares damaged, $21,500 estimate
• Difference: $11,900

Appraisal process:

• Homeowner hires experienced public adjuster as appraiser
• Insurance company’s appraiser re-inspects
• Appraisers meet, agree on 15 squares damaged
• No umpire needed—appraisers reached agreement

Outcome:

• Agreed amount: $18,200
• Homeowner’s appraiser cost: $2,800
• Additional payment: $8,600
• Net benefit: $5,800
• Resolved in 6 weeks without umpire

Example 3: When Appraisal Wasn’t the Right Choice

Situation:

• Insurance denies claim as “cosmetic damage only”
• Homeowner believes damage is functional
• Dispute: Whether damage is covered, not amount

Why appraisal doesn’t help:

• Appraisal resolves amount disputes
• This is a coverage dispute (functional vs. cosmetic)
• Appraisal clause doesn’t apply

Better approach:

• Internal appeal with technical documentation
• State insurance department complaint
• Hire public adjuster to fight coverage denial
• Lawsuit for breach of contract if necessary
• Appraisal only useful AFTER coverage established

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Common Questions

Does invoking appraisal hurt my relationship with my insurance company?

Short answer: No—it’s a standard policy provision you’re entitled to use.

Why it’s okay:

• Appraisal is a contractual right in your policy
• Insurance companies expect some claims to go to appraisal
• It’s non-adversarial compared to lawsuits
• Shows you’re serious about fair settlement
• Actually preserves relationship better than litigation

After appraisal:

• No retaliation allowed by law
• Can’t cancel or non-renew solely for using appraisal
• Future claims handled normally
• Award becomes part of normal claim process

Can I choose my contractor as my appraiser?

Yes, in most cases:

Advantages:

• Already familiar with your damage
• Knowledgeable about your specific roof
• Invested in fair outcome
• No additional inspection needed
• May offer services at lower cost

Considerations:

• Must be qualified and credible
• Should have appraisal experience
• Needs to prepare professional documentation
• Must be able to defend estimates
• Should understand appraisal process

Best candidates:

• Experienced roofing contractors
• Those familiar with insurance claims
• Strong documentation skills
• Professional reputation
• Willingness to commit time

How long does the appraisal process take?

Typical timeline:

Week 1-2:

• Submit appraisal demand
• Insurance responds
• Both parties select appraisers

Week 3-4:

• Appraisers inspect property
• Prepare independent reports
• Meet to compare findings

Week 5-8 (if umpire needed):

• Select umpire
• Umpire reviews evidence
• May conduct own inspection
• Issues decision

Total: 2-4 months typically

• Simple cases: 6-8 weeks
• Complex cases: 3-6 months
• Much faster than lawsuit (1-3 years)

What if I disagree with the appraisal award?

Very limited options:

Grounds to challenge award:

• Fraud or misconduct by appraiser/umpire
• Award exceeds scope of appraisal clause
• Mathematical errors
• Appraiser exceeded authority

NOT valid grounds:

• Simply disagreeing with amount
• Thinking award is too low/high
• Different opinion on value
• Wishing you’d gotten more

Practical reality:

• Awards are binding and final
• Courts rarely overturn appraisal awards
• Only egregious errors or misconduct justify challenge
• Need attorney to pursue appeal

Before accepting appraisal:

• Understand it’s binding
• Consider mediation or negotiation first
• Only invoke appraisal if ready to accept result

Does appraisal replace my right to sue?

No—separate processes:

Appraisal resolves:

• Amount of loss only
• Valuation disputes
• Scope and cost questions

Lawsuit can still address:

• Coverage disputes (even after appraisal)
• Bad faith claims
• Breach of contract
• Violation of insurance laws
• Damages beyond policy limits

Common scenario:

• Appraisal determines damage is $30,000
• Insurance still denies coverage (says not covered peril)
• Lawsuit addresses whether covered
• If you win, appraisal amount becomes settlement

Preserving rights:

• Appraisal doesn’t waive right to sue
• Can pursue legal action after or during appraisal
• Award can be used as evidence in lawsuit
• Time limits (statutes of limitation) still apply

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Related Insurance Terms

• Adjuster: Insurance professional whose estimate you may dispute through appraisal
• Claim: The insurance request that may lead to appraisal if disputed
• Settlement: The amount determined by appraisal process
• Public Adjuster: Licensed professional who may serve as your appraiser
• Umpire: Neutral third party in appraisal process
• Award: The binding decision issued through appraisal
• Coverage: What appraisal cannot resolve—only amount disputes
• Bad Faith: Conduct that may warrant lawsuit instead of appraisal

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Need help with a disputed roof claim? Contact us today for a free consultation. We can help you determine if appraisal is the right approach, connect you with qualified appraisers, and guide you through the process to achieve fair compensation.