What is an appraisals clause commonly found in insurance policies?

An appraisal clause is an important aspect of insurance policies as it establishes a method for resolving disputes related to the value of a claim. When a disagreement arises between the insured and the insurer regarding the amount of loss or damage, the appraisal clause allows both parties to engage independent appraisers to evaluate the situation. Each party typically selects their appraiser, and those appraisers then work together to agree on an independent third-party appraiser if necessary. This process is designed to facilitate an equitable resolution without needing to go through lengthy litigation, making it a vital provision for prompt claim settlements.

The other options do not accurately describe the nature of an appraisal clause. For example, clauses that require claims to be settled in court do not pertain to the appraisal process, nor do they provide an independent method of valuing losses. A clause about filing a claim is focused on the procedural aspects of reporting losses, while a coverage clause outlines what is included under the insurance policy, which also diverges from the purpose of an appraisal clause.