How to Invoke the Appraisal Clause in Your Insurance Policy

What is the Appraisal Clause?

The appraisal clause is a provision found in most auto insurance policies that provides a formal dispute resolution process when you and your insurance company cannot agree on the amount of a loss. It is most commonly used in total loss situations where the insurance company's offer is significantly below the vehicle's true market value.

The appraisal clause allows each party to appoint an independent appraiser. The two appraisers then attempt to agree on the vehicle's value. If they cannot agree, they select a neutral umpire, and agreement by any two of the three is binding on both parties.

Step-by-Step: How to Invoke the Appraisal Clause

Step 1: Review Your Policy

Read the "Appraisal" or "Right to Appraisal" section in your auto policy. It is usually found under "Conditions" or "Damage to Your Auto." Confirm that it applies to total loss valuation disputes and check for any deadlines.

Step 2: Do Not Accept the Settlement

Do not sign a release or cash the settlement check. Once you accept payment, the appraisal clause usually cannot be used. If the offer is significantly below what you believe your vehicle is worth, do not accept it.

Step 3: Send a Written Demand

Write a formal letter to the insurance company's claims department stating that you dispute the amount of loss and are invoking the appraisal clause under your policy. Include your name, policy number, claim number, vehicle information, and the current offer. Send by certified mail with return receipt requested.

Step 4: Hire an Independent Appraiser

Your policy requires each side to select a "competent and impartial" appraiser. You pay for your appraiser, and the insurance company pays for theirs. Choose an appraiser who specializes in total loss valuations and has experience with insurance appraisal disputes. National Appraisers LLC provides this service nationwide.

Step 5: The Appraisers Negotiate

After both appraisers are appointed, they independently value the vehicle and attempt to agree on an amount. Your appraiser will gather comparable sales data, condition information, options, mileage adjustments, and any documentation supporting a higher value.

Step 6: Umpire Decision (If Needed)

If the two appraisers cannot agree, they select a neutral umpire. Agreement by any two of the three (both appraisers, or one appraiser plus the umpire) is binding under the policy. The costs of the umpire are typically split between both parties.