How does the 'insurance appraisal clause' assist in disputes?

The insurance appraisal clause is designed to provide a structured process for resolving disputes related to the value of a claim. When there is disagreement between the insurer and the insured about the amount of a loss, the appraisal clause allows for an independent assessment of the claim value. This typically involves both parties selecting an appraiser, who then evaluate the loss independently. If their evaluations differ significantly, they can appoint a neutral umpire to help come to a settlement. This process helps ensure that disputes are resolved fairly and efficiently, minimizing the conflict and potential for litigation.

Other options do not accurately describe the function of the appraisal clause. For instance, mediation is a different dispute resolution method that is not specified within the appraisal clause. Similarly, court arbitration is a more formal legal process that goes beyond the scope of appraisal. Adjustments to policy limits after a claim also do not fall under the appraisal clause's purpose, as it focuses specifically on the valuation of the claim rather than changing policy terms post-incident.