North Carolina Adjuster Practice Exam

In the context of insurance, what does the term 'umpire' refer to?

1. A mediator that resolves claims disputes

2. A third-party appraiser in the appraisal process

3. An insurer’s claims adjuster

4. An insurance policy underwriter

The correct answer is: A third-party appraiser in the appraisal process

The term 'umpire' in the context of insurance specifically refers to a third-party appraiser involved in the appraisal process. When there is a disagreement between an insurer and a policyholder regarding the value of a claim, the appraisal clause in an insurance policy allows both parties to select their own appraisers. These appraisers will then assess the loss independently. If the two appraisers cannot agree on the value, they will bring in a third-party appraiser, referred to as the umpire, to help resolve the dispute and determine the final amount owed for the claim. This role is crucial in facilitating a fair resolution in situations where appraisal results differ, thus ensuring an unbiased evaluation is provided. In summary, the umpire serves to mediate the differences between the two appraisers, ensuring that the appraisal process remains impartial and leads to an equitable outcome for all parties involved.