If the parties cannot agree on the loss amount and appraisal is used, which option describes this step?

If the parties cannot agree on the loss amount and appraisal is used, which option describes this step?

• A. Settlement
• B. Negotiation or appraisal (if needed)
• C. Subrogation
• D. Investigation

Answer: (B)

When there is a disagreement about how much the loss is worth, many policies set up an appraisal process to settle the amount. The idea is to start with negotiation, and if that doesn’t yield an agreement, move to appraisal. In appraisal, each side hires its own appraiser, the two appraisers then select an impartial umpire, and together they work to determine the loss amount. If they can agree, that amount becomes the settlement; if they can’t, the umpire’s decision finalizes the amount. This is exactly what the option “negotiation or appraisal (if needed)” describes.

When there is a disagreement about how much the loss is worth, many policies set up an appraisal process to settle the amount. The idea is to start with negotiation, and if that doesn’t yield an agreement, move to appraisal. In appraisal, each side hires its own appraiser, the two appraisers then select an impartial umpire, and together they work to determine the loss amount. If they can agree, that amount becomes the settlement; if they can’t, the umpire’s decision finalizes the amount. This is exactly what the option “negotiation or appraisal (if needed)” describes.