When an insured disagrees with the valuation of a loss, how is the loss settled?

When there is a disagreement over the valuation of a loss between an insured and the insurance company, the process typically invokes the use of appraisers as part of the claims resolution mechanism. In this system, both parties generally select their own appraisers to assess the value of the loss. If those two appraisers cannot agree on a value, a third appraiser, often referred to as an umpire, is brought in to facilitate a resolution.

The correct method for settling the loss follows the agreement of any two out of the three appraisers involved. This approach ensures that both the insured and the insurer have a fair representation in the valuation process, while also allowing for an impartial adjudication of the loss amount. The involvement of a third party helps minimize biases that may arise from each side's appraiser having conflicting interests.

This procedure fosters a collaborative effort to define a fair settlement amount that reflects the actual loss sustained, aiming for a resolution that is acceptable to both parties while adhering to the terms of the insurance contract.