Appraisal Clause
What Is an Appraisal Clause?
An appraisal clause is a rule in your policy that lets you use neutral third-party appraisers and an umpire (if needed) to resolve settlement value disputes between you and the insurance company.
Why It Matters For Beauty and Bodywork Professionals
- Fair value check: Appraisal clauses provide a structured way to challenge a low equipment valuation on tools and supplies like massage tables, facial steamers, shears, or hot stone sets without going to court.
- Number focus: Appraisals determine how much, not whether something is covered, so there’s no arguing unrelated issues
- Faster than litigation: Resolve value issues faster through appraisals, so you can replace gear and keep client appointments
- You control your side: Choose an appraiser who understands beauty and bodywork equipment and real-world replacement costs
How Does the Appraisal Process Work?
When a dispute arises over the value of your loss (like a stolen massage table or a water-damaged facial steamer), you can start or “invoke” the appraisal clause. After that:
Each side picks an appraiser: You choose a knowledgeable appraiser, and the insurance company chooses theirs.
- Appraisers compare values: The two appraisers review the facts of the lost or damaged item, including things like serial numbers, photos, age and condition, and the item’s current replacement cost.
- Umpire if needed: If the two appraisers can’t agree, they present their numbers to a neutral umpire. Any agreement by two of the three sets the amount of loss.
- Payment issued per policy: The insurance company pays according to policy terms, for example, Actual Cash Value minus any deductible.
What is the Difference Between the Appraisal Clause and Arbitration?
Appraisal clauses are for disputes about settlement payment amounts (money). Arbitration clauses are for disputes over your policy’s rules.
Appraisal = price, valuation, and settlement amount disagreements.
Arbitration = coverage and policy disagreements.
| Feature | Appraisal Clause | Arbitration Clause |
|---|---|---|
|
Main Purpose |
Settles disputes about the dollar amount of a loss
|
Settles broader disputes about coverage or fault
|
|
Who’s Involved |
Each side picks an appraiser; an umpire may decide if they disagree
|
A neutral arbitrator or panel makes a decision
|
|
Outcome |
Sets the dollar value; coverage terms and limits still apply
|
Usually binding with limited appeals
|
|
Common Use |
Used in property damage claims
|
Used in liability or contract disputes |
Feature: Main Purpose
Appraisal Clause:
Settles disputes about the dollar amount of a loss
Arbitration Clause:
Settles broader disputes about coverage or fault
Feature: Who’s Involved
Appraisal Clause:
Each side picks an appraiser; an umpire may decide if they disagree
Arbitration Clause:
A neutral arbitrator or panel makes a decision
Feature: Outcome
Appraisal Clause:
Sets the dollar value; coverage terms and limits still apply
Arbitration Clause:
Usually binding with limited appeals
Feature: Common Use
Appraisal Clause:
Used in property damage claims
Arbitration Clause:
Used in liability or contract disputes
How Do I Start (Invoke) the Appraisal Clause?
Check your policy wording. Look for an “Appraisal” or “Appraisal of Loss” section for exact steps and timelines. You may need to send an official written request stating you’re invoking the appraisal clause due to the loss valuation. You may also need to name your chosen appraiser.
Include all relevant information when initiating your request, like receipts and invoices, serial numbers, photos (before and after), maintenance records, and like-kind replacement quotes or links. To keep things moving, reply quickly to your appraiser and the insurer.
Who Pays for the Insurance Umpire in the Appraisal Process?
Typically, each party pays its own appraiser, and the umpire’s fee is split. Exact details about cost-sharing and selection steps will be outlined in your policy. Ask your appraiser for a cost estimate before you proceed.
Do Appraisal Clauses Apply to Liability Claims or Only My Equipment?
Appraisal is primarily used for first-party property valuation, such as your personal property, including gear, supplies, and small electronics. It usually does not apply to liability claims.
Appraisal clauses don’t decide questions or disputes about liability or coverages. If the disagreement is about what your policy does or does not cover, you’ll need to follow your policy’s other dispute provisions, like arbitration.
Related Terms
- Arbitration
- Deductible
- Adjuster
- Business personal property
