Knowledge Center
The Auto Insurance Appraisal Clause Explained
A breakdown of the common components found in an appraisal provision and how they typically function — with an important note that actual policy language varies.
What Is an Appraisal Clause?
An appraisal clause — sometimes called an appraisal provision — is a section of an insurance policy that establishes a process for resolving certain disagreements over vehicle value or the amount of a loss. When the insurer and the policyholder (or, in some cases, a claimant under an applicable provision) cannot agree on a valuation or amount-of-loss issue, the appraisal clause may provide a structured path to resolution.
It is important to understand that appraisal clauses are not standardized. The language, scope, and requirements vary substantially among insurance policies and jurisdictions. The information below describes components that commonly appear in appraisal provisions — but the actual wording of the applicable policy controls in every case.
Common Components of an Appraisal Provision
Triggering Disagreement
Most appraisal provisions are triggered when the parties cannot agree on the value of a vehicle or the amount of a loss. The provision typically specifies what type of disagreement qualifies — commonly a dispute over Actual Cash Value, repair costs, or another amount-of-loss issue. Not every type of insurance dispute triggers an appraisal right.
Written Demand
Many provisions require that appraisal be formally demanded in writing. The policy may specify who can make the demand, when it must be made, and how it must be delivered. Failing to follow the demand requirements could affect the right to invoke appraisal.
Selection of Appraisers
Under most appraisal provisions, each party selects its own appraiser. The policy may specify qualifications — such as requiring that appraisers be competent, independent, or disinterested. The selection process and any applicable deadlines are typically defined in the policy.
Independence and Qualification Requirements
Some provisions require that appraisers be independent of the parties or meet other qualification standards. The specific requirements — if any — depend on the policy language and applicable law. An appraiser who does not meet the applicable requirements may be subject to challenge.
Exchange and Review of Valuation Evidence
The appraisers typically review and exchange relevant documentation and valuation evidence. This may include vehicle information, comparable vehicles, repair estimates, photographs, valuation reports, and other materials relevant to the disputed amount. The scope of what is relevant depends on the nature of the dispute.
Agreement Between Appraisers
Many provisions provide that if the two appraisers agree on the disputed amount, that agreement resolves the dispute. The policy will specify what constitutes a binding agreement and what happens if the appraisers cannot agree.
Selection of an Umpire
When the appraisers cannot agree, most provisions call for the selection of a neutral umpire. The policy typically specifies how the umpire is selected — often by agreement between the appraisers, or by a court if they cannot agree. Umpire qualifications and selection procedures vary by policy.
Submission of Unresolved Differences
Once an umpire is selected, the appraisers typically submit the issues they could not resolve. The umpire reviews the evidence and the appraisers' positions on the unresolved items and reaches an independent conclusion.
Appraisal Award
Many provisions specify that an agreement between the two appraisers, or between one appraiser and the umpire, constitutes a binding appraisal award. The exact requirements for a valid award — and its legal effect — depend on the policy language and applicable law.
Allocation of Expenses
Most provisions address who pays for the appraisers and the umpire. Typically, each party pays its own appraiser, and the cost of the umpire is shared equally. The actual allocation depends on the policy.
Why Policy Language Matters
The components described above represent common elements found in many appraisal provisions — but they are not universal. Some policies include additional requirements; others omit certain elements or use materially different language.
Do not assume that any general description of an appraisal clause accurately reflects the language in a specific policy. The only reliable source for the requirements of a particular appraisal process is the actual policy document — and, where applicable, the law of the relevant jurisdiction.
Educational Disclaimer
A1 Auto Appraisals is an independent vehicle appraisal company and is not a law firm. The information provided on this page is for general educational purposes only and should not be considered legal advice. Insurance policies, appraisal provisions, claim circumstances, and applicable laws vary. Questions concerning legal rights, insurance policy interpretation, or applicable law should be directed to a qualified attorney in the applicable jurisdiction.