South Dakota Crop Insurance Practice Exam

What is the process called when the company and insured cannot agree on the percentage of loss?

1. Settlement

2. Appraisal

3. Mediation

4. Arbitration

The correct answer is: Appraisal

The process referred to when the company and the insured cannot agree on the percentage of loss is called appraisal. In the context of crop insurance, appraisal involves a formal review to assess the extent of the damage and determine the actual amount of loss. During this process, both the insurer and the insured typically select their own appraisers, who will conduct an independent evaluation of the affected property. If the two appraisers cannot agree on the loss amount, a third appraiser, often referred to as an umpire, may be involved to help resolve the dispute. This method helps ensure a fair and impartial assessment based on evidence rather than subjective opinion. By using appraisal, the parties can arrive at a clear and mutually recognized determination of loss, which is critical for proper claims processing and compensation under the insurance policy. It serves as a structured means of resolving disagreements specifically about the level of loss sustained, distinguishing it from other forms of dispute resolution such as mediation or arbitration, which may involve broader issues beyond just the quantification of loss.