What is an Appraisal Clause?
The appraisal clause allows you to dispute your insurance company's valuation without hiring an attorney or going to court. You and the insurance company each select an independent appraiser, and the appraisers work to agree on the value of your vehicle.
The appraisal clause is a little known, yet very powerful, tool that is included in most insurance policies. If your vehicle is totaled or stolen, and the insurance company offers you a payout that seems too low, the appraisal clause can be invoked making it much more likely that you will get a fair settlement. It gives you a way to dispute their valuation without hiring an attorney or going to court. It’s a highly effective method of protecting yourself from being lowballed.
Here is an example of a typical appraisal clause:
Why Haven't I Heard About This Before?
You're not alone. The appraisal clause often gets buried in the fine print, under sections like "Loss Settlement," "Dispute Resolution," or "Right to Appraisal." This clause allows you to request an independent review of your vehicle's value by a qualified appraiser if you and your insurance company disagree. Most people only discover it after they've been lowballed on their claim, but knowing about it ahead of time is like having a secret weapon, you’ll be ready to use it when you need it most.
The Typical Appraisal Clause Process
Here's how the appraisal clause process generally works, step by step
Step 1Notification
If you and your insurer can’t agree on the value of your claim, either you or the insurance company can trigger the appraisal clause. To do this, you will need to notify your insurer in writing. A simple email to your adjuster or a message in the claims portal will do the trick, but make sure it includes the magic words:
At this point, it’s important to follow up to ensure that they acknowledge your request in writing. Give them a few days to acknowledge that the appraisal clause has been invoked. This will make sure that everyone is on the same page.
Step 2Selection of Appraisers
Each side selects an independent appraiser to determine the value of the vehicle. The quality of the appraisal report is very important because it becomes the foundation for the discussion between the two appraisers. Anyone can put a number on a vehicle. The important part is being able to show how that number was reached and support it when challenged.
My reports typically include at least three carefully selected comparable vehicles and documented adjustments for mileage, options, upgrades, and other measurable differences between the comparables and your vehicle. I do not simply attach a few listings and state an opinion. I explain why the comparables were selected, how they differ from your vehicle, and how those differences affect the final value. You can compare one of my appraisal reports with a report submitted by an opposing appraiser to see the difference.
After handling more than 1,000 appraisal cases, I have seen just about every approach an opposing appraiser can use to support a lower value. That includes using the wrong trim or engine, overlooking valuable options, relying on rental or fleet vehicles, selecting comparables from Rust Belt states, using vehicles with unfavorable histories, and applying unsupported condition deductions. I also regularly see rare, modified, exceptionally clean, or low-mileage vehicles treated like average examples. If these differences are not identified and challenged, they can directly affect the final value.
My appraisal is always independent and based on the market evidence. My success-based fee structure also keeps my interests aligned with yours throughout the process.
I review every case before recommending the appraisal clause. If I do not believe there is enough potential upside to justify the cost, I will tell you that upfront. You are not paying only for a report. You are paying for the experience to know what to look for, what to challenge, and how to support the value of your specific vehicle.
Step 3Appraisal Review and Negotiation
Once both appraisals are complete, I exchange my report with the insurance company’s appraiser and carefully review their valuation. I compare the vehicles they used, verify the trim, engine, options, mileage, and history, and challenge anything that does not fairly represent your vehicle.
The other appraiser reviews my report as well, and we work to reach an agreement based on the available market evidence. If we agree on a value, we sign an appraisal award and the insurance company uses that amount to settle the claim under the terms of the policy.
Step 4What Happens if the Appraisers Don’t Agree?
Most of my cases are resolved directly between the two appraisers without needing an umpire. However, if the appraisers cannot agree on the value of your vehicle, the appraisal clause lays out a process for resolving the disagreement. The two appraisers must agree on and select an umpire, who serves as a neutral third appraiser.
The umpire reviews both appraisal reports and supporting evidence, conducts independent research, and works with both appraisers to reach an agreement. When the umpire and either appraiser agree on a value and sign the appraisal award, that value becomes final and binding.
Since the umpire determines the outcome when the two appraisers cannot agree, selecting someone who is fair and neutral is critical. In my experience, opposing appraisers sometimes propose umpires whose experience, background, or approach gives me reason for concern. I take this decision seriously and consider each proposed umpire’s qualifications, relevant experience, potential conflicts, and my own experiences working with them on past appraisal cases. I do not accept someone simply to keep the case moving, and I will not agree to an umpire unless I am fully confident that they will be fair and neutral.
Before proceeding to an umpire, I will explain the additional cost, where the two valuations stand, and whether I believe the potential benefit justifies moving forward. I will never commit you to an umpire or an additional fee without your approval.
Step 5Receiving Payment
Once a final value is decided, either through agreement between the appraisers or by the umpire, the insurance company has to pay you that amount within a reasonable timeframe. No more back-and-forth, no more hassle, just a fair payout.
Get Paid Sooner with the Undisputed Amount
One thing many people don’t realize is that most insurance companies will pay out the undisputed portion of your claim while the appraisal clause process is underway. For example, if the insurer offers $10,000 and you believe your loss is worth $15,000, they can pay the $10,000 now while you settle the rest through the appraisal process.
To request this, you can use a simple message like this:
Subject: Request for Payment of Undisputed Amount – Claim #[Your Claim Number]
Hi [Adjuster’s Name],
As we continue with the appraisal clause process, could you please process payment of the undisputed amount of my claim? This will help ease the financial burden while we finalize the valuation. Thank you!
Sincerely, [Your Name]
This keeps the process moving and gets you funds faster while resolving the dispute.
How Long Does The Appraisal Clause Process Take?
The timeline for resolving a claim through the appraisal clause process can vary, but typically it moves much faster than dragging things through court. Here's a general breakdown of what you can expect:
Acknowledgment of Appraisal Clause Invocation (a few days)
Once you officially invoke the appraisal clause, the insurance company typically takes about a few days to acknowledge it. This acknowledgment confirms that your request is being processed.
Insurance Company's Hiring of Appraiser (1-2 weeks)
After acknowledging your invocation, the insurance company will work on hiring their appraiser. This process generally takes an additional 1-2 weeks, during which they will also provide me with their appraiser's contact information.
Appraiser Contact and Negotiation (1-2 weeks)
After I receive the contact information for the insurance company’s appraiser, it generally takes an additional 1-2 weeks for both appraisers to complete their evaluations, exchange reports, and attempt to reach an agreement. During this stage, there may be back-and-forth negotiations as we each review the comparables, adjustments, and methodologies used.
Umpire (If Needed)
If the two appraisers can't come to an agreement on their own, we’ll appoint an impartial umpire, which is needed in less than 10% of cases. While this can add some time to the process, the majority of cases are resolved within the initial 2-4 week period without the need for an umpire. If an umpire is required, it could take another 1-2 weeks for them to make a final decision.
What If My Policy Doesn’t Have an Appraisal Clause?
Not every insurance policy includes an appraisal clause, but that doesn’t mean you’re out of options. If your policy doesn’t have this provision, here are a few ways you can still fight back against a low offer:
Review Your Policy Carefully
Take the time to comb through your insurance policy thoroughly. There may be other provisions that can help you in disputing a low valuation, even if an appraisal clause isn’t explicitly mentioned.
Negotiate
Don’t assume the insurance company’s first offer is their best. A well-prepared, independent appraisal (like the ones I provide at Fair Auto Appraisals) can give you the leverage you need to negotiate a fair settlement. Additionally, sometimes obtaining a second independent appraisal that corroborates the first can strengthen your position. While the total cost of appraisals might approach $1,000, the resulting increase in your settlement can often be well worth the investment.
File a Complaint
If you believe your insurer is acting unfairly or lowballing your claim in bad faith, you have the option to file a complaint with your state’s insurance department. This can trigger an investigation and potentially help you get the payout you deserve.
Seek Legal Counsel
If you’ve hit a wall with the insurance company, you may want to consult with an attorney who specializes in insurance claims. They can help you explore your options, including whether small claims court might be a path worth pursuing.
How the Appraisal Clause Protects Against Unfair Valuations
The appraisal clause isn’t just a tool; it’s your best defense against unfair lowball offers. Insurance companies might undervalue your vehicle, but you have the right to challenge their offer. The appraisal clause empowers you to secure a fair valuation without the stress and cost of lengthy legal battles.
By invoking the appraisal clause, you bypass the hassle of court, avoid attorney fees, and skip the drawn-out process of litigation, which can take months or even years. Instead, you get a fast, straightforward solution that ensures a fair settlement, saving you time, money, and frustration.
Understanding the Final Decision
The appraisal clause is designed to bring the valuation dispute to a final resolution. Once the appraisers agree on a value, or an umpire sides with one of the appraisers, the resulting valuation is generally binding on both you and the insurance company under the terms of the policy.
There is always some uncertainty with any valuation dispute, but nearly all of my clients are happy with the outcome. I review each case before recommending the appraisal clause and work to support the strongest value justified by the market evidence. If the appraisers cannot agree, a neutral umpire reviews both positions and helps determine the final value.
In Conclusion
When it comes to disputes over the value of your vehicle, I believe the appraisal clause is your best friend. It is a powerful tool that allows you to challenge low offers and helps ensure you get the payout you deserve. Even if your policy doesn’t include an appraisal clause, you still have ways to fight for a fair settlement, whether it’s negotiating directly, seeking legal advice, or filing a complaint.
If you are in the middle of a dispute with your insurance company or have just received a lowball offer, don’t hesitate to reach out to Fair Auto Appraisals LLC. I specialize in appraisal clause cases and will guide you every step of the way to make sure you don’t settle for less than you deserve.
I understand the appraisal clause process inside and out and know how to advocate for a fair outcome. Let’s work together to secure the payout you deserve.
Not Sure Whether Appraisal Makes Sense?
Send me the insurance company's valuation report. I'll review it and tell you whether I see enough potential upside to pursue the appraisal clause.
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