Appraisal clause
Claims · Cloudbreak team · Updated October 29, 2026 · 7 sources
Definition
An appraisal clause is a property insurance provision that lets either the insurer or the insured demand a binding appraisal when they disagree on the value of damaged property or the amount of loss, and sets the procedure that appraisal follows.
How it works
Most property policies, commercial and residential, include an appraisal clause among their loss conditions. It applies to disagreements about how much: the value of the property or the amount of loss. Either side can start it with a written demand.
The standard procedure runs in a fixed order:
- Each party selects a competent and impartial appraiser.
- The two appraisers select an umpire. If they cannot agree, either may ask a court to make the selection.
- The appraisers state separately the value of the property and the amount of loss.
- If the appraisers fail to agree, they submit their differences to the umpire. A decision agreed to by any two of the three is binding.
Each party pays its own appraiser, and the two share the umpire's cost and other appraisal expenses equally. Appraisal sets values and the amount of loss; questions of whether a loss is covered sit outside it in the standard wording.
The ISO commercial property wording
In ISO's Building and Personal Property Coverage Form, CP 00 10 10 12, the clause is Loss Condition E.2, "Appraisal". Either the insurer or the insured may make a written demand when they disagree on the value of the property or the amount of loss. If the appraisers cannot agree on an umpire, either may ask a judge of a court having jurisdiction to select one.1
CP 00 10 also states that the insurer still retains its right to deny the claim after an appraisal.1
Example
Example: under CP 00 10, the insured's appraiser charges $6,000, the insurer's appraiser charges $8,000, and the umpire and other appraisal expenses total $5,000. Each party pays its own appraiser and half of the $5,000.1
| Insured | Insurer | |
|---|---|---|
| Own appraiser | $6,000 | $8,000 |
| Half of umpire and other expenses | $2,500 | $2,500 |
| Total borne | $8,500 | $10,500 |
State rules: Texas TWIA appraisal
The Texas Windstorm Insurance Association (TWIA) offers wind and hail coverage to coastal residents and businesses. Its appraisal process is governed by Texas Insurance Code Sections 2210.574 and 2210.5741 and by 28 TAC 5.4211, as amended January 2, 2024. It applies only after TWIA accepts coverage in full or in part.3,4,5,6
Texas: TWIA claim letters titled Notice of Claim Acceptance, Notice of Claim Denial, or Notice of Claim Acceptance in Part and Denial in Part. The 60-day appraisal deadline runs from receipt of the letter, and each acceptance notice must explain the appraisal process and its deadlines.7,6
| Step | Rule | Source |
|---|---|---|
| Demand on the accepted amount | Within 60 days after receiving the claim acceptance notice; TWIA may grant 30 more days on a written good-cause request made within 15 days after that | Ins. Code 2210.574(b), (c) |
| Demand on the replacement cost amount | Within 30 days after the replacement cost payment notice, if no appraisal was demanded under 2210.574, whether or not repairs are complete | Ins. Code 2210.5741(d); 28 TAC 5.4211(c) |
| How a demand is made | Telling TWIA the claimant disagrees with the amount or that it may not be enough; TWIA acknowledges in writing within 10 days | 28 TAC 5.4211(c) |
| Appraisers | Each side retains an independent, qualified appraiser and tells the other side its fees within 5 days | 28 TAC 5.4211(d), (g) |
| Umpire | Within 15 days after the appraisers are named, they disclose projected fees and agree on an umpire; otherwise the commissioner selects one from a TDI roster | 28 TAC 5.4211(e); Ins. Code 2210.574(e) |
| Appraisers' deadline | Commercial claims 120 days, residential 90 days, after both appraisers are named | 28 TAC 5.4211(f) |
| Panel deadline | Commercial claims 90 days, residential 60 days, after the umpire becomes involved | 28 TAC 5.4211(j) |
| Decision | Agreement of the two appraisers, or an itemized decision agreed to by any two of the three, is binding on the amount of loss | 28 TAC 5.4211(l) |
| Review | Not appealable, except by a district court action within 2 years to vacate it on listed grounds, such as fraud, corruption, evident partiality or misconduct | Ins. Code 2210.574(f), (g) |
Under Section 2210.574(f), a claimant who does not demand appraisal in time waives the right to contest TWIA's amount of loss on the accepted claim. TWIA and the claimant may extend the rule's deadlines in writing, and so may the commissioner.4,6
Questions
- Is an appraisal award binding?
- Under the standard clause, a decision agreed to by any two of the appraisers and umpire is binding on the amount of loss. CP 00 10 adds that the insurer retains its right to deny the claim. For Texas TWIA claims, it is binding on the amount of loss, subject only to Section 2210.574(g).1,4
- Who pays for an insurance appraisal?
- Each party pays its own appraiser, and the two share the umpire and other expenses equally, as CP 00 10 states. For Texas TWIA claims, the claimant and TWIA pay all appraisal costs in equal shares, including any fee TDI charges for its umpire roster.1,4
- Does appraisal decide whether damage is covered?
- The clause addresses disagreements on value or amount of loss. Under CP 00 10 the insurer retains its right to deny the claim. In Texas, TWIA appraisal applies only after TWIA accepts coverage in full or in part.1,6
- Can an insurer refuse an appraisal demand?
- Under the standard clause either party may demand appraisal. A few jurisdictions allow either party to reject the demand, through state amendatory endorsements.2
- What is the deadline to request appraisal from TWIA?
- 60 days after receiving TWIA's claim acceptance notice, unless TWIA or the Texas Department of Insurance states otherwise. With replacement cost coverage, a claimant who has not yet demanded appraisal also has 30 days after the replacement cost payment notice.4,7,5
Sources
Written by the Cloudbreak team. Numbers, dates and rules cite the published sources below.
- 1. Insurance Services Office (copy hosted by Independent Insurance Agents of Texas): Building and Personal Property Coverage Form, CP 00 10 10 12
- 2. IRMI: Appraisal clause
- 3. Texas Department of Insurance: Commercial property insurance guide
- 4. Texas Legislature: Texas Insurance Code Section 2210.574, Disputes Concerning Amount of Accepted Coverage
- 5. Texas Legislature: Texas Insurance Code Section 2210.5741, Replacement Cost Coverage Claim Processing
- 6. Texas Department of Insurance: Commissioner's Order 2024-8458: Adopted amendments to 28 TAC 5.4211, Appraisal Process (January 2, 2024)
- 7. Texas Windstorm Insurance Association: Rights and Responsibilities