When the policyholder and insurance company disagree concerning the amount of a loss, the policyholder may submit a written demand for appraisal pursuant to the terms of their insurance policy.
Once appraisal is invoked, two impartial appraisers are selected on behalf of the policyholder and on behalf of the insurer. The Arizona courts have narrowed the role of appraisers to determining strictly questions of valuation:
The function of appraisers is to determine the amount of damage resulting to various items submitted for their consideration. It is certainly not their function to resolve questions of coverage and interpret provisions of the policy.1
The appraisers mutually select an umpire to submit any disagreements regarding the amount of loss.2 Typically, each party will pay its chosen appraiser and share the expenses of the umpire equally. Arizona policyholders should be aware that appraisal is generally considered “waived” if not requested within one year of the date of loss.3 However, in light of public policy considerations, the Arizona courts generally disfavor waivers, thus the party seeking to establish a waiver bears the burden of proof.4
1 Hanson v. Commercial Union Ins. Co., 723 P.2d 101, 150 Ariz. 283 (Ariz. App. 1986) (quoting Hughes v. Potomac Ins. Co of D.C., 199 Cal. App. 2d 239, 253 (Ct. App. 1962)).
2 If an umpire cannot be agreed upon, a court having jurisdiction will make the umpire selection.
3 Meinke v. Twin City Fire Ins. Co., 181 Ariz. 576, 582 (Ct. App. 1994).
4 Meinke, 181 Ariz. at 581.