Hearing that your beloved car is a “total loss” is tough. Even tougher is receiving the insurer’s Actual Cash Value (ACV) offer—a figure that often feels thousands of dollars short of what you need to replace your vehicle.
If direct negotiation with your insurance adjuster has failed and you are stuck in a dispute over the dollar amount, there is a powerful, contractual mechanism available to you: the Appraisal Clause.
It’s an insurance industry secret that allows you to take the valuation dispute out of the adjuster’s hands and place it into a structured, independent resolution process.
What is the Appraisal Clause?
The Appraisal Clause is a standard provision found in the “Damage to Your Auto” section (Collision/Comprehensive coverage) of most auto insurance policies. It is designed to provide a method of reaching a settlement when you and the insurance company agree that the loss is covered, but disagree on the amount of the loss.
In the context of a total loss, this means you agree your car is totaled, but you are challenging the insurer’s low valuation of your car’s ACV.
Why Invoke Appraisal?
Invoking this clause is a serious step, often reserved for disputes where the difference in value is significant (e.g., $1,500 or more).
- Bypasses the Adjuster: It formally moves the valuation decision away from the assigned adjuster and into the hands of independent experts.
- Binding Decision: The decision reached through the appraisal process is typically binding on both you and the insurance company, resolving the dispute without the cost and time of a lawsuit.
- Expert Valuation: You get the chance to use an expert appraiser who can find comparable sales, factor in all your unique features and maintenance, and build a strong case for a higher ACV.
Step-by-Step: The Appraisal Clause Process
While the exact wording varies by state and policy, the appraisal process follows a standard, three-party structure:
Step 1: Formal Demand
You must first notify your insurance company in writing (usually certified mail is best) that you are formally invoking the Appraisal Clause as outlined in your policy. You should specifically reject their current offer and state that the dispute is over the ACV.
Step 2: Selection of Appraisers
- You must hire your own competent and impartial appraiser—someone who specializes in total loss valuations.
- The Insurance Company will select its own appraiser.
- Cost: You are responsible for paying the fees of the appraiser you select.
Step 3: The Negotiation and Umpire Selection
- Your appraiser and the insurer’s appraiser will independently assess the loss and then negotiate to agree on a final ACV.
- If the two appraisers fail to agree on the amount of loss, they must mutually select a third, neutral party called an Umpire.
- Cost: The cost of the Umpire is typically split equally between you and the insurance company.
Step 4: The Binding Decision
- The final amount of the loss will be the figure agreed upon by any two of the three parties (your appraiser, the insurer’s appraiser, or the Umpire).
- This agreed-upon value becomes the final settlement amount, and the insurance company must pay that amount (minus your deductible, if applicable).
If you are dealing with a significant disagreement over the value of your totaled vehicle, invoking the Appraisal Clause can be the most effective way to protect your rights and ensure you receive fair market value. Reach out to Acquire Auto immediately so that we can represent you.