Michigan Insurance Appraisal: How the Appraisal Clause Works

Your insurer has agreed that the storm, fire, or burst pipe is covered. The problem is the number. Your contractor’s estimate is several times the adjuster’s, and months of emails have not closed the gap. Your policy has a paragraph titled “Appraisal.”

Appraisal is a fast, private way to settle a fight over how much a covered loss is worth, but it cannot overturn a denial, and invoking it at the wrong moment can cost leverage or time. Vahdat Weisman Law property damage claims attorneys help Michigan property owners decide whether to invoke appraisal or file suit. Call (734) 469-4994 for a free consultation. No attorney fee unless we recover for you.

What the Michigan Appraisal Clause Says

Every Michigan fire and property policy must contain an appraisal provision on terms set by the Insurance Code (MCL 500.2833(1)(m)). A policy may reword it, but a provision that conflicts with the statute is void (MCL 500.2860; Smitham v State Farm Fire & Cas Co, 297 Mich App 537 (2012)).

How the statute works:

• The trigger. If you and your insurer “fail to agree on the actual cash value or amount of the loss,” either side may make “a written demand” that the amount be set by appraisal.
• Your appraiser. Each side selects “a competent, independent appraiser” and must tell the other who it is “within 20 days after receipt of the written demand.”
• The umpire. The two appraisers then pick “a competent, impartial umpire.” If they cannot agree on one within 15 days, you or the insurer may ask a judge of the circuit court for the county where the loss occurred or the property is located to select the umpire.
• The decision. The appraisers set the amount of loss and actual cash value item by item. Where they cannot agree within a reasonable time, they submit their differences to the umpire. A “written agreement signed by any 2 of these 3 shall set the amount of the loss.”
• The cost. “Each appraiser shall be paid by the party selecting that appraiser.” The umpire’s compensation and other appraisal expenses are split equally between you and the insurer.

Your appraiser must be independent; only the umpire must be impartial.

What Appraisers Can Decide, and What They Cannot

Appraisal is a “substitute for judicial determination of a dispute concerning the amount of a loss” (Auto-Owners Ins Co v Kwaiser, 190 Mich App 482 (1991), quoting Thermo-Plastics R & D, Inc v General Accident Fire & Life Assurance Corp, 42 Mich App 418 (1972)). It determines the value of a covered loss, not whether the loss is covered; in the words of Kwaiser, “the issue of coverage is for the court, not the appraisers.”

That line decides whether you can use appraisal at all. If your insurer has not admitted liability, a court must decide coverage before ordering appraisal (Cantina Enterprises II, Inc v Property-Owners Ins Co, 349 Mich App 682 (2024)). In Cantina, the insurer accepted that a restaurant fire was covered and made partial payments, so the remaining fight over which items counted as covered property went to the appraisers.

The Court of Appeals drew the boundary more tightly this year. Where an insurer paid only for specific items it considered covered and disputed the rest, paying for some items was not an admission of liability for the others. The homeowners could not force appraisal of the disputed claims (Maksym v Auto-Owners Ins Co, published opinion, Docket No. 372827 (Mich Ct App, Feb. 24, 2026)). The kitchen may be ready for appraisal while the basement remains a coverage dispute.

Even a binding award does not erase the policy’s conditions. In Dupree v Auto-Owners Ins Co, 497 Mich 1 (2014), the appraisers set actual cash value, and the Michigan Supreme Court held the homeowner still had to meet the policy’s replacement-cost condition, actual replacement, before the withheld depreciation was owed.

Can Appraisers Decide What Caused the Damage?

You say hail ruined the roof; the insurer says age did. Is that an amount question or a coverage question?

No published Michigan appellate decision we located has squarely answered it. Kwaiser lets appraisers decide “what particular articles or items of property are embraced” in the loss. A federal judge in the Eastern District of Michigan read Michigan law as allowing appraisers to resolve causation once a covered loss is admitted (Haddock v. State Farm Fire & Cas Co, No. 21-cv-12395 (ED Mich, Oct. 25, 2022)). That was a federal prediction, and it does not bind Michigan state courts.

If part of the damage was denied as wear and tear, that piece may be treated as a coverage question for a judge. Our page on wear and tear denials covers that problem.

Should You Invoke Appraisal or Sue?

You do not have to use appraisal. Invoking it is discretionary, and choosing not to does not affect the timeliness of an underpayment lawsuit (Smitham, published opinion).

Appraisal tends to make sense when:

• the insurer has accepted coverage in writing for the items in dispute;
• the gap is about scope, pricing, or repair-versus-replace; and
• you have a contractor’s or estimator’s line-item estimate to support your number.

A lawsuit makes sense when the insurer has denied all or part of the claim, when it disputes whether the damage came from a covered cause, or when you need tools only a court has, such as subpoenas and depositions of the insurer’s adjuster or engineer.

Appraisal is usually quicker and cheaper than trial, with no jury and very narrow review, which helps if the award is fair and hurts if it is not. Once one side properly demands appraisal, the other side cannot simply walk away, and a circuit court can order the process to begin (Frans v Harleysville Lake States Ins Co, 270 Mich App 201 (2006)).

Picking Your Appraiser and Paying for the Process

Pick someone who knows construction pricing and the type of loss, such as an experienced estimator, contractor, engineer, or licensed public adjuster, and put the fee arrangement in writing before the 20-day window closes.

A contingency fee does not by itself disqualify an appraiser. The Court of Appeals allowed a public adjuster working on a percentage fee to serve, reasoning that “an independent appraiser may be biased toward the party who hires and pays him,” and noted that the other side must be told about a contingency agreement (White v. State Farm Fire & Cas Co, Docket No. 298083 (Mich Ct App, July 28, 2011)).

The umpire’s fee is shared equally, so ask about the umpire’s rate before agreeing to one.

Does Appraisal Stop the One-Year Clock?

A Michigan property policy must allow you to sue “within 1 year after the loss or within the time period specified in the policy, whichever is longer.” That period is tolled “from the time the insured notifies the insurer of the loss until the insurer formally denies liability” (MCL 500.2833(1)(q)).

A formal denial “must be explicit and direct” (Smitham). An insurer can restart the clock by explicitly denying all liability beyond what it has paid. A letter that clearly denies some items while leaving others open can start the clock on the denied items and not the rest (Maksym).

We found no Michigan statute or appellate decision holding that demanding appraisal, or a pending appraisal, pauses this deadline on its own. If any part of the claim has been formally denied, count from that letter and protect the right to sue on that part while appraisal proceeds on the rest.

After the Award: Payment, Interest, and Challenges

Can the award be set aside? Rarely. Courts review an appraisal award only for “bad faith, fraud, misconduct, or manifest mistake” (Kwaiser, citing Port Huron & NR Co v Callanan, 61 Mich 22 (1887); Dupree). A rival expert’s disagreement with the number is not enough.

Can the insurer still refuse to pay? It cannot reject an award simply because it dislikes the figure. However, it can still refuse payment on grounds unrelated to the amount, such as arson (Frans, footnote 1), and preserved coverage defenses survive the award.

Do you get interest? Possibly. If your insurer does not pay on a timely basis, it owes 12 percent per year interest on claims you are directly entitled to, running from 60 days after it received satisfactory proof of loss (MCL 500.2006(4)). The insurer must tell you in writing, within 30 days after receiving your claim, what materials make up a satisfactory proof of loss (MCL 500.2006(3)). Satisfactory proof “does not equate to agreement as to the amount of damages,” so the interest clock can start long before the award, and an insurer must pay the undisputed portion while appraisal proceeds (Griswold Properties, LLC v Lexington Ins Co, 275 Mich App 543 (2007)). The statute’s “reasonably in dispute” exception applies to third-party tort claimants, not to you as the insured (Nickola v MIC General Ins Co, 500 Mich 115 (2017)). Our page on underpaid and delayed claims explains penalty interest in more detail.

What Appraisal Cannot Fix?

Appraisal cannot reverse a denial, rewrite an exclusion, or decide whether you met policy duties such as notice and cooperation. If your roof claim was denied outright, you usually have to go to court first. Storm claims raise their own documentation issues, covered on our storm, wind, and hail damage claims page.

Why Choose Vahdat Weisman Law?

Appraisal decisions turn on the documents: the policy, the insurer’s written coverage position on each item, the date of any formal denial, the proof-of-loss correspondence, and a line-item estimate. We separate coverage questions from amount questions, calendar the suit deadline, and advise whether appraisal or a lawsuit fits your claim.

From our Livonia office, we represent injured people and their families throughout Michigan. Founding partners Kara E. Weisman and Jordan S. Vahdat have each been honored as Super Lawyers Rising Stars. Our attorneys are members of the State Bar of Michigan and active in the Michigan Association for Justice. We advance case costs, we work in English and Spanish, and we are available 24/7.

Frequently Asked Questions

• Should I invoke appraisal or sue my insurance company? If coverage is accepted and only the dollar amount is disputed, appraisal is often faster and cheaper. If any part was denied or causation is disputed, a lawsuit may be needed for that part. Appraisal is optional in Michigan (Smitham).
• Can the insurer still deny my claim after the appraisal award? An insurer cannot reject an award just because it disagrees with the number, and courts set awards aside only for bad faith, fraud, misconduct, or manifest mistake. It can still refuse payment on separate grounds, such as fraud or arson, and a judge still decides coverage questions (Frans; Kwaiser).
• Who pays for the insurance appraisal? You pay your appraiser, and the insurer pays its own. The umpire’s fee and other appraisal expenses are split equally (MCL 500.2833(1)(m)).
• Does demanding appraisal stop the one-year deadline to sue? We found no Michigan authority saying it does. The period is tolled from notice of loss until a formal denial of liability, so calendar one year from any explicit denial letter.

About the Author

Jordan S. Vahdat is a founding partner of Vahdat Weisman Law in Livonia and handles negligence, premises liability, auto accident, and insurance dispute cases. He has been admitted to all Michigan state courts since 2014, practices in the Eastern District of Michigan, and has served as a case evaluator for the Washtenaw Circuit Trial Court and the 15th District Court since 2020. He is fluent in Spanish.

Talk to a Michigan Insurance Appraisal Lawyer

If you are weighing appraisal or a lawsuit over a property claim, call Vahdat Weisman Law at (734) 469-4994 or contact us online for a free consultation. Available 24/7, serving all of Michigan, with Spanish-speaking staff.

Dedicated to Justice. Devoted to You. Winning for Your Future.

Reviewed by Jordan S. Vahdat, Vahdat Weisman Law. Last reviewed October 2026.

This information is for educational purposes only and does not constitute legal advice. Every case is unique, and prior results do not guarantee future success.