When a policyholder and an insurer agree that a commercial loss is covered but cannot agree on its dollar value, most property policies provide a contractual off-ramp called “appraisal.” Each side picks an appraiser; if those two experts can’t reach a figure, they nominate a neutral umpire whose signature—together with either appraiser—sets a binding amount of loss. The umpire is therefore the swing vote on any dispute over scope, pricing, or repair methodology.
Why Tennessee Businesses Should Pay Attention
- Appraisal is compulsory once properly demanded. Federal courts sitting in Tennessee have compelled reluctant carriers to submit to the process, emphasizing that the policy language is not optional (e.g., Morrow v. State Farm, Ingram v. State Farm). McWherter Scott & Bobbitt
- “Scope” questions are appraisable. Tennessee decisions treat the methods and quantities of repair as part of “amount of loss,” preventing insurers from sidestepping appraisal by re-labelling the dispute. McWherter Scott & Bobbitt
- Statutory good-faith duties still apply. Insurers that stonewall or delay can face bad-faith exposure under Tenn. Code Ann. § 56-7-125 and unfair-claims regulations. Austin Peay State University
The Umpire’s Role—and How It Can Go Sideways
- Tie-breaker, not arbitrator. Courts have stressed that umpires decide value, not coverage, and their awards are not “binding arbitration” unless the policy expressly says so (Merrimack Mut. v. Batts). Tennessee Courts
- Selection pitfalls. Traditional language lets the two appraisers agree on one umpire or ask a judge to appoint. Newer forms sometimes let either side race to court for a unilateral appointment, a tactic insurers have begun using nationwide. Practitioners warn that whoever wins the race often gets a friendlier umpire. Property Insurance Coverage Law Blog
- Qualifications matter. Tennessee courts expect a “competent, impartial” umpire. For complex commercial losses—think supply-chain interruption or manufacturing plants—look for credentials in construction, forensic accounting, or large-loss adjusting.
Practical Guidelines for Tennessee Commercial Policyholders
- Invoke appraisal early, in writing. Cite the policy clause and propose at least two qualified appraisers to signal good faith.
- Vet potential umpires before you need one. Maintain a short list of neutrals with deep commercial experience; share it with the opposing appraiser to speed consensus and avoid courthouse races.
- Document scope disagreements. Detailed estimates and photographs equip your appraiser—and ultimately the umpire—to justify higher values.
- Budget for half the umpire’s fee. Costs are typically split 50/50; complex claims can run into five-figure fees, but still beat protracted litigation.
- Preserve coverage defences. If the insurer later denies parts of the claim, Tennessee precedent lets a court tackle those issues after the appraisal award, so keep evidentiary trails intact. McWherter Scott & Bobbitt
Looking Ahead
Legislative proposals and emerging policy forms are reshaping appraisal procedure—especially umpire appointment—across the country. Savvy Tennessee businesses should read the full policy every renewal, watch for clauses that alter the traditional three-member panel, and negotiate clearer language if necessary.
Handled strategically, an appraisal with a credible, neutral umpire can turn a months-long valuation fight into a relatively swift resolution that keeps repairs moving and business doors open. In the high-stakes world of commercial property coverage, understanding—and, when needed, wisely selecting—the umpire may be the single most important move you make.
We at The David Group specialize in public adjusting and umpire services for commercial claims. Send us a message at our homepage to get in touch.