Property and Casualty Insurance Practice Exam

What describes the Appraisal process in insurance?

1. Only one appraiser is involved in disputes

2. Both parties select an appraiser, and an umpire is involved if there's a disagreement

3. The insurance company decides the final payout

4. It is a legal process requiring court intervention

The correct answer is: Both parties select an appraiser, and an umpire is involved if there's a disagreement

The appraisal process in insurance is designed to resolve disputes between the insured and the insurer regarding the amount of loss or damage. In this process, both parties have the opportunity to select their own appraiser, which fosters a sense of fairness and impartiality. If the appraisers selected by each party cannot agree on the value of the loss, they will then appoint a neutral party known as an umpire to make the final determination. This collaborative approach serves to expedite the resolution of disputes without resorting to litigation or lengthy negotiations. It is a more informal and efficient method than taking the issue to court, thus avoiding significant legal expenses and delays. By utilizing both chosen appraisers and an umpire when needed, the appraisal process encourages mutual agreement while allowing for a definitive resolution in the case of disagreement.