The Umpire’s Role in the Resolution of Insurance Valuation Disputes

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Insurance policies provide a method of dispute resolution called appraisal which falls under arbitration statutes in Arizona. When an impasse in the determination of the amount of a loss is reached, one party will demand (or request) appraisal and will name an appraiser. The other party will do so as well. The two appraisers will appoint a third appraiser to serve as an umpire and two of the three can render an award that will bind all parties.

This simple explanation of the appraisal process ignores the fact that there are other considerations such as cost sharing and the scope of what the appraisal will determine, but this is the essential heart of the process.



As the determination and valuation of insurance losses has become more sensitive, we will see more and more need for umpires and the best place to look for those umpires is the legal profession. To serve as an umpire, one does not need to have a practice limited to arbitration or dispute resolution to be selected for such a role and, in fact, what is needed is simply a penchant for fairness and an understanding of the appraisal process.

While the appraisal panel (all three appraisers) is not unlike a three judge appellate court, there are several varying opinions of the umpire’s role in this process. Is it the role of an umpire to apply rules of evidence or is it the umpire’s role to act as a deal maker? Based upon their backgrounds many, albeit far from all, attorneys will accept legal principles and will attempt to apply the rule of law. Yet, appraisal itself encompasses a confusing body of law. There is very little law and little to no appraisal guidelines in the policy. Is it acceptable for umpires to use rules of evidence and apply burden of proof in appraisals as some umpires wish to do?

I recently participated in an appraisal where the umpire felt that there was not enough evidence presented and “divined” an award wherein an insured felt the dagger of unfairness stabbed in his heart. Can umpires just make such a declaration and send one of the parties home with nothing? I personally think that they cannot. Umpires who believe that they lack information, must give the parties ample opportunity to produce available evidence St. Paul Fire & Marine Ins. Co. v. Tire Clearing House, Inc., etc., 58 F.2d 610 (8th Cir. 1932). They cannot move forward with partial information from either side.

Indeed, the Declaration of Appraisers requires that an appraiser will ” …make a true, just, and conscientious evaluation according to the best of my knowledge, skill and judgment.” In my mind that means that all available information must be considered. To apply the belief that not enough information has been provided or state that someone has not made their case might very well indicate that the umpire hasn’t fully done what he or she was retained to do.

There are others who disagree with me and wish to apply the proof presented in the appraisal applying a standard of who has the better proof. It is a natural response. Common sense tells us that appraisers cannot divorce themselves from the evidence presented. When all parties have presented evidence they feel is adequate, appraisers may come to a conclusion, persuaded by the evidence, as long as it is complete evidence.

While the prove-your-case theory may be legally sound in litigation, I have participated in hundreds of appraisals and believe that the role of an umpire is more than just to advocate this approach. I believe that the role of the umpire is to help the parties reach a consensus. Many years ago, I watched a local attorney (name available upon request) as he forged a consensus between the appraisers that was so acceptable to the appraisers that there was no need for the umpire to sign the award himself. The action of two of the appraisers without the umpire bound the parties.

Another element of helping the party-appointed appraisers is to reach a consensus, is that such a process helps bring closure. There are some who will disagree with this and I understand. But, assuming that all the appraisers sign the award, how could anyone dispute the fairness of an appraisal award if all the appraisers agreed? In the reality of the world of insurance, a consensus dictates closure.


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An umpire might ask the other appraisers to come up with a solution that all might endorse noting that if they can’t agree the umpire will either have to go up or will have to go down. Can the appraisal process always end with the parties reaching a consensus? No. Sometimes an umpire has to bite the bullet but it can be done. Bringing a consensus in an appraisal leading to closure is a laudable goal.

David Young

David E. Young, an Arizona insurance adjuster, is licensed as an independent adjuster in Arizona as well as Utah, California, Texas, Oklahoma, New Mexico, Colorado, Nevada, Oregon, Idaho and Maryland. He is a principal with Brown – O’Haver Public Adjusters and the owner of the Adjusters Insurance School. He is a nationally recognized expert in the appraisal of insurance claims having authored that chapter in the Insurance Settlement Handbook. He is the president of the Rocky Mountain Association of Public Insurance Adjusters and serves on the board of directors of the National Association of Public Insurance Adjusters. For more information, visit

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