What describes an appraisal clause in a property insurance policy and its purpose?

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An appraisal clause provides a mechanism to resolve disputes over the value of a loss when the insured and the insurer can’t agree on the amount to be paid. If a disagreement arises, each side selects a qualified appraiser, and those appraisers usually choose a neutral third person (an umpire) if their figures differ. The appraisers’ determination of the loss amount is then binding on both parties, settling how much will be paid. This process addresses value only, not issues of coverage or liability under the policy. It’s not about obtaining an appraisal before payment, nor does it require both sides to agree to an appraisal in advance, and the appraisal decision is typically binding rather than merely advisory.