The Montana Insurance Appraisal Process, Step by Step

Stage 1Pin down the disagreement

Appraisal only works when the dispute is about how much, not whether. Before anything else, compare the carrier’s estimate with your contractor’s bid line by line and write down exactly where they differ.

• Scope gaps: items the adjuster left out, such as the north slope of a hail-hit roof, gutters, window wraps or a pole barn.
• Pricing gaps: unit costs that don’t reflect what contractors actually charge in Billings, Kalispell or a rural county after a big storm year.
• Depreciation gaps: age or condition assumptions you believe are wrong.

If the carrier has denied the whole claim, or says a peril isn’t covered, that is a coverage question, and appraisal generally can’t answer it. Many disputes also end at this stage when a well-documented supplement is accepted, so send one with photos and a revised estimate before you escalate.

Stage 2Read the appraisal clause

Find the appraisal clause in your policy. It usually sits in the conditions section of a homeowners form, or in the loss conditions of a commercial or farm form. Read it twice and note:

• Who can demand appraisal (usually either party) and whether the demand must be in writing.
• How many days each side has to name an appraiser after a demand.
• How the umpire is chosen and what happens if the appraisers can’t agree on one.
• How costs are split. Most forms have each side pay its own appraiser and share the umpire.
• Whether anything must happen first, such as a sworn proof of loss.

Check your endorsements too. Some carriers amend the clause, and policies written in the surplus-lines market can use wording that differs from standard forms. If the clause is missing or unclear, ask the carrier in writing for a certified copy of the full policy.

Stage 3Send a written demand

Once you decide to proceed, put the demand in writing. Keep it short and factual:

• Your name, the property address, the policy number and the claim number.
• A statement that you and the carrier disagree on the amount of loss and that you are invoking the appraisal provision.
• The name and contact details of your appraiser, or a note that you will name one within the policy’s time frame.
• A brief summary of the disputed amounts, with your estimate attached if you have one.

Send it in a way you can prove, such as certified mail plus email to the adjuster, and keep a dated copy. The carrier may respond by naming its own appraiser, asking for more information or objecting that some items are coverage issues. Answer objections in writing and keep the tone businesslike; the record you build now often matters later.

Stage 4Choose a competent appraiser

Most clauses require each appraiser to be competent and disinterested; some say “independent” or “impartial.” Competent means the person can actually price your loss, whether that is a roofing system, water mitigation, smoke cleaning or log construction. Disinterested generally means no financial or personal stake in the outcome beyond a normal fee.

Questions worth asking any candidate:

• Have you handled appraisals on this type of loss and this type of building?
• Do you have any relationship with my contractor, a public adjuster or the carrier?
• How is your fee set? Some fee arrangements can invite challenges to impartiality, so ask how that is handled.
• Will you inspect in person, and when?

The carrier names its own appraiser under the same standard. If you have doubts about the other side’s choice, raise them early and in writing rather than after an award is signed.

Stage 5Select a neutral umpire

The two appraisers try to agree on a neutral umpire, usually soon after they are named and before serious disagreement sets in. A good umpire understands construction pricing and the policy’s valuation terms and has no ties to either side. Appraisers often trade short lists and disclose any past dealings with each candidate.

If the appraisers can’t agree within the time the policy allows, most clauses let either party ask a court of record in the state where the property sits to choose one. In Montana that generally means a short filing asking a district court to appoint an umpire. Procedures vary, so many people have an attorney handle that request.

• Agree on the umpire’s fee arrangement up front.
• Put the selection and any disclosures in a short written agreement.
• Keep the umpire out of the details until the appraisers actually need a decision.

Stage 6Inspect and build estimates

Each appraiser inspects the property, ideally with the other present so both are looking at the same damage. On a hail claim that may mean walking every slope, checking soft metals and vents, and counting impacts in test squares. On a winter water loss it can mean moisture readings, inspection holes and a review of mitigation logs.

Each appraiser then builds an estimate, usually in Xactimate or Symbility, with pricing that fits the property’s location and when the work can realistically be done. A useful estimate shows:

• A clear scope, room by room or slope by slope.
• Quantities anyone can check: roofing squares, linear feet, square feet of drywall.
• Unit pricing and any overhead and profit.
• Replacement cost, depreciation and actual cash value, if the policy pays them separately.

The appraisers exchange estimates and supporting documents before they sit down to negotiate.

Stage 7Panel talks and umpire hearing

Appraiser negotiation

Most appraisals settle between the two appraisers. They go through the competing estimates line by line, agree on what they can and mark the rest as disputed. Photos, measurements, manufacturer data and local contractor pricing tend to move numbers more than argument does. When both appraisers agree and sign, that award is generally binding on the amount of loss.

Taking it to the umpire

If gaps remain, the appraisers submit only the disputed items to the umpire. Some umpires work from written submissions; others hold an informal meeting, sometimes at the property. Each appraiser explains a position and the evidence behind it. The umpire then decides each disputed item, and an award signed by the umpire and either appraiser usually settles the amount.

Ask your appraiser to walk you through the umpire’s process before it begins so nothing about the format surprises you.

Stage 8The award and payment

The award is a written statement of the amount of loss, often itemized by coverage: dwelling, other structures, contents and loss of use. Many awards show both replacement cost and actual cash value so recoverable depreciation is clear.

• Holdback: under many replacement cost policies, the carrier pays actual cash value first and releases withheld depreciation after repairs are completed and documented.
• Mortgagee on the check: if you have a mortgage, expect the lender’s name on dwelling payments. Lenders often run repair funds through a loss draft process.
• Deductible and prior payments: these come off the award total.

An award decides the amount of loss. It generally does not decide coverage, whether a policy condition was met, or questions about how the carrier handled the claim. If those issues exist, they belong with a licensed Montana attorney.