Roof Insurance Appraisal in Michigan: How the Appraisal Clause Works

Section 2833 of the Michigan Insurance Code lists provisions that every fire insurance policy issued or delivered in Michigan must contain. Homeowners policies cover fire, so they carry these provisions too. Subsection (1)(m) is the appraisal clause. It says that if the insured and insurer fail to agree on the actual cash value or amount of the loss, either party may make a written demand that the amount be set by appraisal.

After a written demand, each party must select a competent, independent appraiser and tell the other side who it is within 20 days. The two appraisers then select a competent, impartial umpire. If they cannot agree on an umpire within 15 days, either side may ask a judge of the circuit court for the county where the loss occurred or the property is located to pick one.

The appraisers set the amount of the loss and actual cash value as to each item. If they agree and submit a written report to the insurer, that amount is the amount of the loss. If they cannot agree within a reasonable time, they submit their differences to the umpire, and a written agreement signed by any two of the three sets the amount. Each appraiser is paid by the party that chose them; the umpire's pay and the other appraisal expenses are split equally.

The Michigan Supreme Court put the dividing line this way in Dupree v Auto-Owners (2014): matters of coverage are generally determined by the courts, while the method of determining the loss is reserved for the appraisers. The Court of Appeals, in the published 2024 decision Cantina Enterprises II v Property-Owners, repeated the older rule from Auto-Owners v Kwaiser (1991): appraisal's purpose is to resolve the amount of loss where liability has been admitted, and where the parties cannot agree on coverage, a court decides coverage first.

The harder cases are about scope. In 2006 Michigan's insurance regulator warned in Bulletin 2006-07-INS that some insurers were calling disagreements over the extent of damage and the scope of repairs "coverage issues" to avoid appraisal, and said that conduct was contrary to the statute. The bulletin was rescinded in 2017, then clarified in a December 2017 memorandum: when coverage is not in dispute, the amount of loss can be decided through appraisal, and once a party demands it, the insurer's participation is mandatory. The Cantina court relied on that history and sent a dispute over which items were part of an admitted loss to appraisal.

Bulletins are advisory and do not have the force of law, and every claim's facts differ. But the pattern for roofs is fairly clear, as the comparison below shows.

The statute splits costs simply: you pay your appraiser, the insurer pays its appraiser, and the two of you share the umpire's fee and any other appraisal expenses equally. Appraiser and umpire fees are set by agreement, not by law, so ask each person you consider how they charge and get it in writing before you hire them.

Appraisal is often confused with two other kinds of help. They overlap, but they are different jobs, and the statute's requirement that your appraiser be independent matters when you choose.

An appraisal award sets the amount of loss. It does not by itself erase the rest of the policy: your deductible still comes off, and on a replacement cost policy the carrier may still hold back depreciation until the work is done. The Michigan Supreme Court noted in Acorn Investment v Michigan Basic Property Insurance Association (2014) that the circuit court keeps the ability to overturn an award if the panel acted in bad faith, and that the court, not the panel, enters the final judgment when one is needed.

On payment, MCL 500.2833(1)(p) requires the policy to provide that the loss is payable within 30 days after the insurer receives proof of the amount of loss, unless another section provides otherwise. Separately, MCL 500.2006 makes benefits not paid on a timely basis carry 12 percent simple interest unless the claim is reasonably in dispute. Ask the carrier in writing when it will pay the award and how it calculated the check.