The Ultimate Guide to the Auto Insurance Appraisal Clause
Disputing a lowball total loss offer? The appraisal clause might be your best weapon. Learn how it works, when to use it, and the step-by-step process.
What is the Appraisal Clause?
The appraisal clause is a provision found in most auto insurance policies that provides a mechanism for resolving disputes between the policyholder and the insurance company regarding the amount of loss. It is an alternative dispute resolution process designed to keep cases out of court, saving both parties time and money.
It is important to note that the appraisal clause applies only to disputes over the value of the claim (e.g., how much the repairs cost or what the car was worth before the accident). It does not apply to disputes over coverage (e.g., whether the policy covers the accident at all).
When Should You Invoke It?
You should consider invoking the appraisal clause when:
- Total Loss Disputes: The insurance company's settlement offer is significantly lower than the actual cash value (ACV) of your vehicle.
- Repair Disputes: The insurer refuses to pay for necessary OEM parts or proper repair procedures recommended by your body shop.
- Stalemate: You have provided evidence to the adjuster, but they refuse to budge on their low offer.
The Step-by-Step Process
- Written Demand: Either you or the insurance company can initiate the process by sending a written demand for appraisal via certified mail.
- Select Appraisers: Each party must hire a competent and independent appraiser within a set timeframe (usually 20 days). You pay for your appraiser, and the insurer pays for theirs.
- Umpire Selection: The two appraisers attempt to agree on a neutral umpire. If they cannot agree, a judge may be asked to select one.
- Appraisal: The two appraisers independently evaluate the loss. If they agree on a figure, that amount is binding.
- Umpire Ruling: If the appraisers disagree, they submit their differences to the umpire. A decision agreed upon by any two of the three (the two appraisers or one appraiser and the umpire) is binding.
Pros and Cons
| Pros | Cons |
|---|---|
| Binding Decision: Resolves the dispute definitively. | Cost: You must pay your appraiser's fee and half the umpire's fee. |
| Expertise: Decided by automotive experts, not adjusters. | Risk: The final award could potentially be lower than the insurer's last offer (though rare). |
| Speed: Generally faster than litigation. | Time: Can still take several weeks or months to conclude. |
Conclusion
The appraisal clause is a powerful tool for policyholders. If you are facing a significant gap between what you are owed and what is being offered, consult with a professional appraiser to see if this path is right for you.