Appraisal is a tool widely-used to settle disputes involving the value of a loss, and it has gained popularity over the past decade as a relatively quick, supposedly inexpensive, and substantially final method of determining damages. For many, however, it remains an unpredictable and mysterious process, fraught with pitfalls in which unfair and unpredictable awards are sometimes the result. No matter what side of the dispute you happen to be on, there is only one way to approach appraisal as a tool to finalize valuation disputes. By describing the process and its benefits and hazards, some of the mystery can be taken out of it.

The assumption is that the simple goal of the parties is to use the appraisal process to arrive at a reasonable result. Unfortunately, a reasonable result often is not what one side or the other is really interested in. Therefore, it is important that we define a reasonable result as an objective and fair determination of the value of a loss. That result is not always synonymous with the position parties take going into appraisal. Hence, the old adage that there are three sides to every story — yours, mine, and the truth — certainly applies.

It should be noted that the legal backdrop of appraisal can vary widely. Some jurisdictions have no case law whatsoever governing the process, while others, like Florida, have a substantial body of case law that can change as often as the weather. The process is fraught with pitfalls that can result in unreasonable and sometimes totally useless awards.