U M P I R E S E R V I C E S

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To get to the umpire, we must fully understand the appraisal processes:

  • In Michigan insurance property claims, an appraisal is a formal dispute resolution process used when the policyholder (the insured) and the insurance company disagree on the value of the property damage or the amount of the loss—not whether the loss is covered, but specifically how much should be paid.

    Key Points of the Appraisal Process in Michigan:

    1. Policy Language Controls:
      Most property insurance policies (like homeowners or commercial property policies) include an "Appraisal Clause" which allows either party (the insurer or the insured) to demand an appraisal when there is a disagreement about the amount of the loss.

    2. Each Party Chooses an Appraiser:

      • The insured selects a competent, impartial appraiser.

      • The insurance company selects its own appraiser.

      • The two appraisers then select an umpire (neutral third party). If they cannot agree, a court can appoint one.

    3. Scope of Appraisal:
      The appraisal process is limited to determining the dollar amount of the loss—not coverage, liability, or policy interpretation.

    4. Umpire’s Role:
      If the two appraisers cannot agree, the umpire reviews their findings and helps determine the final value. An agreement signed by any two of the three (the two appraisers or one appraiser and the umpire) sets the amount of the loss.

    5. Binding or Not?
      In Michigan, the appraisal award is generally binding on both parties regarding the value of the loss, unless there's evidence of fraud, collusion, or procedural misconduct.

    6. Legal Foundation:
      Michigan courts (like in Auto-Owners Ins. Co. v. Kwaiser, 190 Mich App 482, 486, 476 N.W.2d 467 (1991)…) have upheld appraisal awards as enforceable, limiting court intervention to cases involving bad faith or procedural irregularities.

    7. Not for Coverage Disputes:
      If the dispute is over whether damage is covered at all under the policy (not the dollar amount), appraisal is not the proper forum—this would require litigation or alternative dispute resolution.

  • Michigan’s statutory appraisal process, on which the appraisal provisions of the policy are based, is set forth in MCL 500.2833(1)(m). The statute states that every contract for fire insurance in Michigan must include a provision indicating:

    (m) That if the insured and insurer fail to agree on the actual cash value or amount of the loss, either party may make a written demand that the amount of the loss or the actual cash value be set by appraisal. 

    If either makes a written demand for appraisal, each party shall select a competent, independent appraiser and notify the other of the appraiser’s identity within 20 days after receipt of the written demand.

    The 2 appraisers shall then select a competent, impartial umpire. If the 2 appraisers are unable to agree upon an umpire within 15 days, the insured or insurer may ask a judge of the circuit court for the county in which the loss occurred or in which the property is located to select an umpire. The appraisers shall then set the amount of the loss and actual cash value as to each item.

    If the appraisers submit a written report of an agreement to the insurer, the amount agreed upon shall be the amount of the loss.

    If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any 2 of these 3 shall set the amount of the loss.  Each appraiser shall be paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire shall be paid equally by the insured and the insurer.

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What is the umpire's role in an insurance property claim appraisal panel

  • The umpire serves as an unbiased third party—not an advocate for either side. Their duty is to remain fair, independent, and objective throughout the process.

    • Receives and carefully examines the damage estimates, reports, photos, and arguments submitted by both the insured’s and insurer’s appraisers.

    • May ask clarifying questions to either or both appraisers to fully understand the scope of damage and valuation differences.

    • The umpire is only called upon when the two appraisers cannot agree on some or all items.

    • Their main job is to resolve those specific differences and set the amount of the loss where disputes exist.

    • May personally inspect the damaged property to independently assess the condition and the validity of each appraiser’s position, though this is not always required.

    • Not all appraisals require an on-site visit; the need is determined case-by-case.

    • Works with the appraisers to attempt reaching an agreement on disputed items.

    • If the two appraisers reach consensus before umpire intervention is needed, the umpire may not have to render a decision.

    • When the appraisers remain at an impasse, the umpire renders a binding decision (along with either appraiser) on the value of disputed items.

    • A valid award requires the signature of at least two of the three panel members (both appraisers or one appraiser and the umpire).

    • Documents the agreed value(s) in a formal Appraisal Award Form.

    • Ensures clarity, itemization, and completeness of the final award.

  • The umpire's authority is strictly limited to determining the “amount of loss” (e.g., replacement cost, actual cash value, scope of repair) and does not include ruling on policy coverage, causation, or liability issues.