In the context of insurance, what does "appraisal" refer to?

In the context of insurance, "appraisal" refers specifically to the process of determining the actual cash value or the amount of loss associated with a claim. This process typically involves a formal evaluation that may include inspections, assessments of damages, and comparisons to similar properties or previous claims. The appraisal aims to arrive at a fair and reasonable estimate of the value of the property or loss in question, which is crucial in resolving disputes between policyholders and insurance companies regarding claims.

The importance of this process lies in its ability to provide a definitive value that can be used to settle claims, thereby ensuring that policyholders receive compensation that is reflective of their losses. The appraisal process is often invoked when there is disagreement over the value of a claimed loss, making it a fundamental aspect of the claims handling process in the insurance industry.