What the appraisal clause is for
Almost every homeowners, farm and commercial property policy sold in Montana contains a short paragraph titled “Appraisal.” It gives you and your insurer a way to settle one specific kind of dispute: a disagreement over the amount of loss. It doesn’t replace the claim process, and it isn’t a lawsuit. It is a private, policy-based valuation panel that both sides agreed to when the policy was issued.
The Montana appraisal clause in most standard forms reads much like the clause used across the country, but the details matter. Carriers amend it by endorsement, and policies written by surplus-lines insurers can use their own wording. Because Montana has no state FAIR plan, some homes in the wildland-urban interface end up in that market. Read your clause, not a summary of it.
The typical language, piece by piece
A common version says that if you and the insurer fail to agree on the amount of loss, either may demand an appraisal in writing. Each party then chooses a competent and disinterested appraiser within a set number of days. The two appraisers choose an umpire, and if they can’t agree, either side may ask a court of record in the state where the property is located to select one. The appraisers state separately the amount of loss, and any differences go to the umpire. A written award agreed to by any two sets the amount of loss.
Each of those phrases does real work:
- “Fail to agree on the amount of loss.” There must be a genuine disagreement about price or scope. A flat denial is usually a coverage dispute, not an appraisal issue.
- “Either may demand.” You and the carrier hold the same right. Some carriers invoke appraisal themselves when a contractor’s bid is far above their estimate.
- “Competent and disinterested.” Each appraiser must be able to price the loss and must not have a stake in the outcome beyond a fee.
- “Court of record.” If the appraisers deadlock over the umpire, a Montana district court can usually be asked to appoint one.
- “Any two.” Two signatures out of three make the award. The umpire only weighs in when the appraisers can’t agree.
What appraisal can and can’t decide
Appraisal answers how much. It generally doesn’t answer whether. In practice, the panel can usually decide:
- Whether a hail-damaged roof needs full replacement or a repair, once hail damage is accepted.
- Unit pricing for labor and materials in your part of Montana, from Miles City to Whitefish.
- Quantities, such as roofing squares, drywall square footage or linear feet of fence.
- Depreciation and actual cash value, if the policy pays them separately.
It usually can’t decide whether a peril is excluded, whether you met a policy condition, or whether the insurer handled the claim properly. Those questions belong with a licensed Montana attorney. A careful award sometimes lists contested items separately so a later coverage decision can be applied without redoing the appraisal.
Timelines inside the clause
Many clauses give each side a fixed window, often around 20 days, to name an appraiser after a written demand. Some set a similar window for agreeing on an umpire. Policies differ, and Montana law may affect how some time limits apply, so never assume. Write down the dates in your own policy and track them. Our appraisal roadmap walks through each stage in order.
Costs under a standard clause
The usual rule is that each side pays its own appraiser and the two sides share the umpire and other joint costs equally. That split is why appraisal suits meaningful gaps better than small ones.
Illustrative example: if the carrier’s estimate is $18,000 and your contractor’s bid is $41,000, a $23,000 gap may justify the cost of appraisal. A $2,500 gap often doesn’t. These figures are illustrative only.
Conditions that can come first
Some policies require a sworn proof of loss, an examination under oath or access to records before an appraisal demand moves forward. Others are silent. If the carrier says a condition hasn’t been met, answer in writing and consider asking a Montana attorney whether the objection holds up. Don’t let the clock run while you argue about it.
Choosing who sits on your side
Your appraiser is the most important choice you make. Look for someone who prices the type of loss you have, inspects in person and documents every number. On a ranch claim, that might mean someone comfortable with pole barns and machine sheds. In Big Sky or Whitefish, it might mean high-end finishes and resort-area labor costs. We provide appraisal clause representation for policyholders and also serve as a neutral umpire when both sides agree to it.
When the clause isn’t the right tool
The Montana appraisal clause is not the best move when the carrier has denied the claim outright, when the real dispute is about an exclusion, or when the gap is too small to justify the cost. In those situations, a supplement with better documentation, a reinspection request, a complaint to the Montana Commissioner of Securities and Insurance or a conversation with an attorney may make more sense. If terms in your policy are confusing, our claim dictionary defines the words that come up most often in appraisal disputes.