What is Umpire Clause
n umpire clause refers to language in an insurance policy that provides for a means of resolution by an unbiased third party if an insurer and an insured cannot agree on the amount of a claim payment. An umpire clause is the same thing as an arbitration clause. The arbitration process requires both the insurance company and the policy holder to hire an appraiser of their choosing to assess the damages and the cost to repair them. The umpire will agree with one or perhaps both of the resulting appraisals and that amount will be used to satisfy the claim.
Understanding Umpire Clause
The umpire clause is closely related to the appraisal clause, which allows a policyholder to hire an independent appraiser to determine the value of their damages. In turn, the insurance company will also hire their own appraiser. The two appraisers will then get together and select an umpire. The umpire is basically the arbitrator.
These three individuals are known as the appraisal panel. The purpose of the appraisal panel is to set or determine the amount of loss, or the total dollar amount needed to return the damaged property back to it's original condition by repair or replacement.Key Takeaways
- The umpire clause is similar to an arbitration clause and is used to settle disputes between insurance companies and the insured.
- Each party hires an independent appraiser who works with the umpire to resolve differences relating to the claim.
- Only two of the three members of this panel need to agree to resolve the case.