A concept of the Insurance Appraisal Clause that often takes on an erroneous and invalid methodology is the formal “Umpire Intervention”. Too often, inexperienced Appraisers are simply forwarding their entire Appraisal reports to the Umpire without any efforts to exchange with their opposition to determine which, if any, line items have been agreed to.
Often, Appraisers will realize that some line items are, although not in agreement, the total sum in deviation is so minute, that good faith efforts can easily bring many of these items to agreement. Remember, the Appraisal Clause calls for a process was designed this way so that the Umpire only has to consume time and resources on the items that the two Appraisers were not able to resolve. This directly saves the policyholder from undue costs, as the Umpire will not have to address line items that the two Appraisers already had agreed to. This is supported by language in the Appraisal Clause itself (underlined below), and is a very basic tenement of the Appraisal process.
APPRAISAL CLAUSE – “If you and we fail to agree on the amount of loss, either may demand that the amount of loss be set by Appraisal. If either makes a written demand for Appraisal, each shall select a competent, independent appraiser. Each shall notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial Umpire. If the two appraisers are unable to agree upon an Umpire within 15 days, you or we can ask a judge of a court of record in the state where the residence premises is located to select an Umpire. The Appraisers shall then set the amount of the loss. If the Appraisers fail to agree within a reasonable time, they shall submit their differences to the Umpire. Written agreement signed by any two of these three shall set the amount of the loss.“
Referenced below, is an example of a professional level Appraisal Umpire intervention letter, that clearly and concisely segregates the items that were eventually agreed to between the two Appraisers, as well as the remaining items that could not be agreed to, and subject to the “differences” of the two party appointed Appraisers.