Hawaii Insurance License Practice Exam

An appraisal clause in an insurance policy is designed to assist in resolving disputes regarding the amount of a loss. When an insurer and the policyholder cannot agree on the value of a claim or the amount of loss, the appraisal clause allows either party to request an appraisal. This process typically involves hiring independent appraisers to evaluate the loss and provide their assessments. If the appraisers cannot reach an agreement, an additional neutral umpire may be involved to help settle the dispute.

Having this clause in the policy is beneficial because it provides a structured method for both the insured and the insurer to obtain a fair and unbiased assessment of loss, rather than resorting to litigation, which can be time-consuming and costly. The goal is to ultimately facilitate a fair resolution in a more efficient manner, thus streamlining the claims process and helping both parties arrive at a satisfactory conclusion regarding the claim.