What is the appraisal clause in auto insurance?

The appraisal clause is a provision found in nearly every auto insurance policy in the United States that gives policyholders the right to dispute the insurance company's valuation of their vehicle. When invoked, both the policyholder and the insurer each appoint an independent appraiser. If the two appraisers cannot agree, they select an umpire, and the decision of any two of the three is binding on both parties.

When should I invoke the appraisal clause?

You should invoke the appraisal clause when you believe your insurance company's total loss offer or repair estimate is significantly below the true value of your vehicle. Common triggers include receiving a lowball total loss settlement, having your repair estimate short-paid by the insurer, or when the insurer uses questionable comparable vehicles in their valuation.

How do I invoke the appraisal clause?

To invoke the appraisal clause, you must send a formal written demand to your insurance company stating that you are exercising your right to an independent appraisal under the terms of your policy. The letter should reference the specific policy provision, state that you are appointing your own appraiser, and request that the insurer appoint theirs within the timeframe specified in the policy.

How long does the appraisal clause process take?

The appraisal clause process typically takes 30 to 90 days from the date you invoke it. The timeline depends on how quickly both sides appoint their appraisers, how long the appraisers take to complete their valuations, and whether an umpire is needed to resolve any disagreements. Most cases are resolved within 60 days.

Is the appraisal clause decision binding?

Yes, the appraisal clause decision is binding on both the policyholder and the insurance company. Once the two appraisers agree on a value, or an umpire breaks a tie, that amount becomes the final settlement. This is one of the most powerful aspects of the appraisal clause, as it removes the insurance company's ability to simply deny your claim.

How to Invoke the Appraisal Clause: A Step-by-Step Guide | Auto Damage Claim

What Is the Appraisal Clause?

The appraisal clause is a standard provision found in virtually every auto insurance policy in the United States. It exists because insurance is a contract between you and the insurer, and like any contract, there needs to be a mechanism for resolving disagreements about value.

The clause typically reads something like this: "If we and you do not agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will select a competent appraiser. The two appraisers will select an umpire. The appraisers will state separately the actual cash value and the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding."

This language gives you a powerful, legally binding mechanism to challenge the insurance company's valuation. It is not a suggestion or a request; it is a contractual right that the insurer must honor.

When Should You Invoke the Appraisal Clause?

You should consider invoking the appraisal clause in any of the following situations:

Total loss lowball offer: The insurance company's offer for your totaled vehicle is significantly below what you believe the vehicle is worth.
Repair estimate dispute: The insurer's repair estimate does not cover the full cost of proper repairs, including OEM parts, proper labor rates, and necessary procedures like ADAS calibration.
Questionable comparables: The insurer used vehicles with higher mileage, lower trim levels, or from different markets as "comparable" vehicles in their valuation.
Missing options and features: The insurer's valuation does not account for aftermarket upgrades, dealer-installed options, or the specific condition of your vehicle.

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

Step 1: Review Your Insurance Policy

Before you do anything, locate the appraisal clause in your policy. It is typically found in the "Conditions" section of your auto policy, often under a heading like "Appraisal" or "Settlement of Loss." Read the exact language carefully, as the specific requirements (timelines, notice procedures) vary by insurer and state.

Step 2: Send a Formal Written Demand

The appraisal clause must be invoked in writing. Send a formal letter or email to your insurance company's claims department. The demand should include:

Your name, policy number, and claim number
A clear statement that you are invoking the appraisal clause
A reference to the specific policy provision
The name and contact information of your appointed appraiser
A request that the insurer appoint their appraiser within the timeframe specified in the policy

Sample Demand Letter Language

"Dear [Insurance Company Claims Department], I am writing to formally invoke the appraisal clause under my auto insurance policy [Policy Number], Claim Number [Claim Number]. I do not agree with your valuation of my [Year Make Model] and am exercising my contractual right to an independent appraisal as provided in the Conditions section of my policy. I have appointed National Appraisers LLC as my independent appraiser. Please appoint your appraiser within [X] days as required by the policy terms. Please direct all appraisal-related correspondence to National Appraisers LLC at 1-888-967-6488."

Step 3: Appoint Your Independent Appraiser

This is the most critical step. Your appraiser is your advocate in the process. They will prepare a detailed appraisal report documenting the true value of your vehicle and negotiate with the insurer's appraiser on your behalf. Choose an appraiser who is:

Licensed and certified in your state
Experienced with the appraisal clause process specifically
Knowledgeable about your type of vehicle
Willing to negotiate aggressively but professionally

National Appraisers LLC serves as the independent appraiser for policyholders nationwide. We handle the entire process from demand letter to final settlement.

Step 4: The Appraisers Negotiate

Once both sides have appointed their appraisers, the two appraisers exchange their valuations and attempt to reach an agreement. Your appraiser will present the certified appraisal report with comparable sales data, condition adjustments, and market analysis. The insurer's appraiser will present their valuation. In many cases, the two appraisers can reach a settlement at this stage.

Step 5: Umpire Selection (If Needed)

If the two appraisers cannot agree on a value, they must select a neutral umpire. The umpire is typically a retired judge, experienced appraiser, or other qualified professional who reviews both valuations and makes a decision. The agreement of any two of the three (your appraiser, the insurer's appraiser, and the umpire) is binding.

Step 6: Binding Decision and Payment

Once a decision is reached, the insurance company is legally obligated to pay the agreed-upon amount. This is one of the most powerful aspects of the appraisal clause: the decision is binding. The insurer cannot appeal it, renegotiate it, or ignore it. They must pay.

Common Mistakes to Avoid

Accepting the first offer without researching your vehicle's true value

Waiting too long to invoke the clause (some policies have time limits)

Choosing an unqualified or inexperienced appraiser

Not documenting your vehicle's condition, options, and maintenance history

Trying to negotiate without a certified appraisal report

Confusing the appraisal clause with filing a lawsuit (they are different processes)

State-Specific Variations

While the appraisal clause exists in nearly every state, some states have specific requirements or variations. For example, some states require the demand to be sent via certified mail, while others allow email. Some states specify the timeframe for appointing appraisers (typically 7 to 20 days), and a few states have specific qualifications for who can serve as an appraiser.

Visit our state-by-state guide for specific information about the appraisal clause in your state. In Canada, similar provisions exist under the Insurance Act as Statutory Condition 11.

How National Appraisers Can Help

When you hire National Appraisers LLC, we handle the entire appraisal clause process for you. We prepare the demand letter, serve as your independent appraiser, create a certified appraisal report with detailed comparable sales analysis, and negotiate directly with the insurer's appraiser. Our 95% success rate means that in the vast majority of cases, we increase the settlement significantly above the insurer's original offer.

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