The appraisal clause in car insurance (with examples)

Short answer: The appraisal clause is a part of your own auto policy that settles disagreements over the amount of loss. If you and your insurer cannot agree on what your totaled car was worth, either side can call for appraisal. Each side hires an appraiser. The two appraisers pick an umpire. Any two of the three agreeing sets the amount. Each side pays its own appraiser and splits the umpire.

What does the appraisal clause actually say?

Most personal auto policies start from a standard form written by ISO, an insurance industry forms organization. The appraisal section of the 2018 edition of that form, ISO Personal Auto Policy PP 00 01 09 18 (a specimen on file with Virginia's insurance regulator), sits in Part D, Coverage for Damage to Your Auto. In plain terms, it says:

1. If you and the insurer do not agree on the amount of loss, "either may demand an appraisal of the loss."
2. Each side picks a competent and impartial appraiser.
3. The two appraisers pick an umpire.
4. The appraisers each state the actual cash value and the amount of loss.
5. If they disagree, they send their differences to the umpire.
6. A decision agreed to by any two is binding.
7. Each side pays its own appraiser and shares the cost of the appraisal and umpire equally.
8. The insurer does not give up any of its rights under the policy by agreeing to appraisal.

Examples of appraisal clause wording

Insurers can change the standard form, and some states set their own rules. Here are three real examples.

The point of the table: read your own policy. The appraisal section is usually near the end of the physical damage part, often titled "Part D" or "Coverage for Damage to Your Auto." Your declarations page lists any endorsements that change it.

Some state rules also mention appraisal. In Utah, for example, appraisal is one of the steps after a reopened first-party claim: R590-190-11(1)(b)(ii)(D): After notice that a first party claimant cannot purchase a comparable vehicle at market value within 30 days of receiving a cash settlement payment, the procedures an insurer follows on reopening its claim file include to conclude the loss settlement under the appraisal section of the policy in force at the time of the loss. (Utah Admin. Code R590-190-11(1)(b)(ii)(D)).

How does auto insurance appraisal work, step by step?

1. Try to resolve it first. Appraisal is for a real disagreement on the amount. Send the adjuster your specific issues and ask for a written answer.
2. Read the clause. Note who can invoke it, any deadlines, and anything it says about the right to sue.
3. Send a written request. Say you are invoking the appraisal provision of the policy over the amount of loss on your vehicle. Keep a copy.
4. Hire your appraiser. Look for someone with total-loss valuation experience who meets the policy's standard (competent, and impartial or disinterested if the policy says so). Some states license auto damage appraisers; check your state's rules.
5. The insurer names its appraiser. The two appraisers then pick an umpire.
6. The appraisers value the car. Each states actual cash value and the amount of loss.
7. Disagreements go to the umpire. Any two of the three agreeing sets the number.
8. Settlement. The insurer pays the appraised amount under the rest of the policy terms, such as the deductible and any loan payoff.

How much does appraisal cost?

Under the standard wording you pay your own appraiser in full and half the umpire. Fees vary by appraiser and region; get a written fee quote before you hire one. Weigh that cost against the size of the gap. Appraisal makes the most sense when the gap is clearly larger than what you will spend on it.

When do owners use the appraisal clause?

Owners tend to use it when:

• The adjuster has answered in writing and will not move further.
• The disagreement is about value, not coverage. Appraisal does not decide whether something is covered.
• The gap is big enough to justify an appraiser's fee.
• They have evidence an appraiser can use: build sheet, options, service records, and comparable listings.

Owners tend to skip it when the gap is small, when the dispute is really about coverage or fault, or when the claim is against the other driver's insurer. On a third-party claim, your policy's appraisal clause usually does not apply to their company.

Appraisal versus negotiating directly

Appraisal is not the first step. Most owners first show the adjuster, in writing, where the valuation report is off. Our guide on how to negotiate a total loss payout covers what moves an offer and what doesn't. If you are not sure the offer is low at all, start with how to tell.

Where Reclaim fits, and where it does not

Reclaim is not an appraiser. It does not take part in appraisal, pick umpires, or contact your insurer.

What Reclaim does comes before appraisal. Our software reads the insurance company's valuation report and checks it against the real market for your car, for free, so you know whether the gap is worth going after before you pay anyone. If the offer is low, one flat fee gets you a written Independent Total-Loss Valuation Review and a short cover note. You send it yourself. That review is not an appraisal. Some owners send it to the adjuster before deciding on appraisal; others hand it to the appraiser they hire as background. Either way, the appraiser does their own valuation.

Keep reading

• How to negotiate a total loss payout
• How to read a CCC total-loss valuation report
• Do not cash the total-loss settlement check yet

This page is general information, not legal advice about your specific policy or claim.