Property and Casualty Insurance Practice Exam

What is the result if the two appraisers cannot agree in the appraisal process?

1. The insurance company decides unilaterally

2. The umpire is consulted to resolve the disagreement

3. The appraisal process restarts with new appraisers

4. The insured must accept the lower amount proposed

The correct answer is: The umpire is consulted to resolve the disagreement

In the appraisal process, if the two appraisers cannot come to an agreement on the value of the loss, the next step is to consult an umpire. This procedure is designed to ensure a fair resolution when there is a disagreement between the appraisers, who are each representing the interests of the insured and the insurer, respectively. The role of the umpire is crucial; they are typically a neutral third party with expertise in such matters. Their involvement helps facilitate a settlement by providing an expert opinion that can bridge the gap between the differing valuations proposed by the appraisers. This process emphasizes fairness and aims to achieve a resolution that could satisfy both parties. Other choices suggest alternative outcomes, such as unilateral decisions by the insurance company or starting the appraisal process over, neither of which are standard practices in the industry. The insured being required to accept the lower amount proposed does not reflect the purpose of the appraisal process, which is to ascertain a fair value based on impartial assessment rather than imposing a lower figure.