APPRAISAL CLAUSE Meaning and
Definition
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An appraisal clause refers to a provision found in insurance policies that establishes a mechanism for resolving disputes between the insured and insurer over the value of a property or asset. It offers a formal procedure to ascertain the correct evaluation of the loss or damage suffered, aiming to reach a fair resolution.
When a disagreement arises between the insured and insurer regarding the value of a claim, either party can activate the appraisal clause. Under this clause, an independent and impartial appraiser is selected by each party. These appraisers evaluate the property or asset and independently provide their own assessment of its value. If the appraisers fail to agree on the value, they appoint an umpire to resolve the dispute.
The umpire is intended to serve as an impartial mediator. The appraisers present their evaluations to the umpire, who reviews the evidence and determines the final value of the claim. The decision made by the umpire is often binding on both parties, settling the dispute.
The inclusion of an appraisal clause enhances transparency and ensures that disagreements over valuations are resolved fairly. It provides an alternative to costly and time-consuming litigation, aiming to expedite the claims settlement process and promote a more satisfactory outcome for both the insured and the insurer.
Etymology of APPRAISAL CLAUSE
The word "appraisal" is derived from the Old French word "apreisier", which means "to set a price" or "to value". It further derives from the Latin word "appretiare", meaning "to appraise" or "to estimate the value of". The word "clause" comes from the Latin word "clausus", which means "closed" or "enclosed". In the context of legal language, it refers to a specific provision or condition within a contract or agreement. Therefore, the term "appraisal clause" combines these two word origins to refer to a provision in a contract that outlines the process for assessing or determining the value or worth of something.
