Under the Loss BAP Condition Appraisal for Physical Damage Loss, when is the appraisal provision entered into?

• A. When there is a disagreement on the amount of loss
• B. For every loss, regardless of disagreement
• C. Only for total losses
• D. Only for theft

Answer: (A)

The thing being tested is when the appraisal mechanism kicks in to settle a physical-damage loss under the Loss BAP Condition. This provision is invoked only after there’s a disagreement over how much the loss is worth. It isn’t required for every loss, nor is it limited to only total losses or only theft. When there’s a dispute over the dollar amount, the insured and insurer appoint appraisers who work to agree on a value; if they can’t reach an agreement, an umpire helps resolve the remaining difference. The goal is to determine a fair loss amount without resorting to litigation, with the resulting figure binding for settlement.