What is the Appraisal Clause in Car Insurance?

The Appraisal Clause Explained

Nearly every auto insurance policy in the United States contains an appraisal clause — a provision that allows either party (you or the insurer) to demand an independent appraisal when there's a disagreement about the value of a covered loss. Most policyholders don't know this clause exists, but it's one of the most powerful tools available for resolving insurance disputes.

The appraisal clause bypasses the normal claims negotiation process and establishes a binding, independent valuation through qualified appraisers. It's faster and less expensive than litigation, and the result is typically binding on both parties.

When to Use the Appraisal Clause

• Total Loss Disputes: The insurance company's total loss offer is lower than your vehicle's actual fair market value
• Repair vs. Total: You disagree about whether the vehicle should be repaired or totaled
• Repair Cost Disputes: Disagreement over the cost or scope of repairs
• Supplement Denials: The insurer won't approve necessary additional repairs
• Diminished Value: In states where DV is covered, disputes over the amount of diminished value

The Appraisal Clause Process

1. Written Demand: Send a formal letter to your insurance company invoking the appraisal clause. Send via certified mail and reference the specific policy section.
2. Select Your Appraiser: You choose a qualified, independent appraiser. This is where an ASCAA-certified appraiser is essential — their credentials and USPAP training give your position maximum credibility.
3. Insurance Selects Theirs: The insurance company selects their own appraiser (typically within 20 days).
4. Appraisers Confer: The two appraisers independently determine the value, then meet to attempt agreement.
5. Umpire (If Needed): If the appraisers can't agree, they jointly select a neutral umpire. If they can't agree on an umpire, either party can petition the court to appoint one.
6. Binding Decision: Agreement between any two of the three (your appraiser, their appraiser, and the umpire) constitutes a binding determination.

Tips for Success

• Choose a Certified Appraiser: Your appraiser's qualifications matter enormously. ASCAA certification demonstrates USPAP training and professional qualification.
• Act Quickly: Don't wait too long to invoke the clause. Some policies have time limits.
• Document Everything: Keep copies of all correspondence, including the demand letter and responses.
• Know Your Policy: Read the appraisal clause in your specific policy — terms vary between insurers.

Learn more about ASCAA's insurance dispute appraisal service.