Question 1

What is Right of Appraisal?

Accepted Answer

Right of Appraisal refers to a contractual right — found in some insurance policies — to invoke a formal appraisal process when a disagreement arises over the value of a vehicle or the amount of a loss. The right comes from the applicable insurance policy and, in some jurisdictions, may also be affected by state law.

Question 2

What is an appraisal clause?

Accepted Answer

An appraisal clause (also 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. It typically provides for each party to select an appraiser, for the appraisers to attempt to reach agreement, and for a neutral umpire to resolve any differences the appraisers cannot agree on.

Question 3

Does every auto insurance policy have an appraisal clause?

Accepted Answer

No. Not every auto insurance policy contains an appraisal clause. Whether a right of appraisal exists in a particular situation depends on the specific policy. Reviewing the actual policy is the essential first step.

Question 4

Who can invoke appraisal?

Accepted Answer

The appraisal provision in the policy specifies who may invoke the process. Most provisions allow either the insurer or the insured to demand appraisal. Some provisions may have additional requirements or limitations. The policy language controls.

Question 5

Does appraisal apply to every insurance dispute?

Accepted Answer

No. Appraisal is generally designed to address disagreements over vehicle value or the amount of a loss — not every type of insurance dispute. Questions of coverage, legal liability, causation, bad faith, and policy interpretation are generally outside the scope of the appraisal process. Whether a particular dispute is within the scope of an applicable appraisal provision depends on the policy language and applicable law.

Question 6

What does an auto appraiser do?

Accepted Answer

An appraiser evaluates the disputed valuation or amount-of-loss issue within the scope of the appraisal. The appraiser gathers and reviews relevant evidence — such as vehicle information, comparable vehicles, repair estimates, photographs, and valuation reports — and develops a professional, evidence-based opinion of the disputed amount.

Question 7

What happens if the appraisers disagree?

Accepted Answer

If the two appraisers cannot reach agreement on all issues, the applicable provision typically calls for the selection of a neutral umpire. The appraisers submit the unresolved differences to the umpire, who reviews the evidence and reaches an independent conclusion on the submitted issues.

Question 8

What is an umpire?

Accepted Answer

An umpire is a neutral, disinterested third party who becomes involved when the two appraisers cannot reach agreement. The umpire reviews the evidence and the appraisers' positions on the unresolved issues and reaches an independent professional conclusion. The umpire does not represent either party.

Question 9

Who pays the appraisers?

Accepted Answer

In a typical insurance appraisal process, each party is responsible for the cost of the appraiser it selects. The actual allocation of appraisal expenses is controlled by the applicable insurance policy and, where applicable, state law.

Question 10

Who pays the umpire?

Accepted Answer

In a typical insurance appraisal process, the umpire's fee and applicable umpire expenses are generally divided equally between the parties. However, the actual allocation of appraisal expenses is determined by the applicable insurance policy and, where applicable, state law — so the appraisal provision should be reviewed for the requirements that apply to the specific situation.

Question 11

Is an appraisal award binding?

Accepted Answer

Many appraisal provisions state that a valid award is binding on the parties with respect to the amount determined. However, the scope of that binding effect — and whether it can be challenged — depends on the policy and applicable law. Some jurisdictions allow awards to be challenged on limited grounds.

Question 12

Can appraisal determine insurance coverage?

Accepted Answer

Generally, no. Appraisal is designed to determine disputed amounts — not to resolve coverage questions, legal liability, causation, bad faith, or policy interpretation. The boundary between appraisable amount-of-loss questions and non-appraisable legal questions can depend on the policy and jurisdiction.

Question 13

Can appraisal be used for a total-loss disagreement?

Accepted Answer

It depends on the applicable policy and law. Many appraisal provisions cover Actual Cash Value disputes on total-loss claims. However, not every policy contains an appraisal clause, and not every appraisal clause covers every type of valuation disagreement. The policy must be reviewed.

Question 14

Can appraisal be used for repair disputes?

Accepted Answer

It depends on the applicable policy and law. Some appraisal provisions are broad enough to cover certain amount-of-loss disputes involving repairs; others are more narrowly written. Whether a particular repair dispute is within the scope of an applicable appraisal provision requires a review of the policy language and applicable law.

Question 15

Can appraisal be used for diminished value?

Accepted Answer

It depends on the applicable policy and law. Whether diminished value is recoverable and whether a diminished value dispute may be submitted to appraisal are separate questions. Some appraisal provisions cover diminished value as an amount-of-loss issue; others do not. The policy and applicable law must be reviewed.

Question 16

How long does appraisal take?

Accepted Answer

The duration of the appraisal process varies depending on the complexity of the dispute, the availability of the appraisers and umpire, and any deadlines specified in the policy. There is no universal timeline. The applicable policy may specify certain deadlines; other aspects of the timeline depend on the parties and the circumstances.

Question 17

What documents should be provided?

Accepted Answer

The relevant documentation depends on the type of dispute. For a total-loss valuation, relevant documents may include vehicle information, comparable vehicle listings, valuation reports, and condition documentation. For a repair dispute, relevant documents may include repair estimates, invoices, photographs, and parts documentation. Providing accurate, relevant documentation helps the appraiser develop a well-supported opinion.

Question 18

Do I need an attorney to use appraisal?

Accepted Answer

There is no universal requirement that parties be represented by an attorney to invoke or participate in the appraisal process. However, appraisal involves contractual rights and obligations, and procedural missteps can affect those rights. When the applicable requirements are unclear, when significant amounts are at stake, or when there is any question about whether appraisal is available or appropriate, consulting with a qualified attorney familiar with insurance law in the applicable jurisdiction is advisable.

Auto Insurance Appraisal Clause FAQ