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Stop Letting the Insurance Company Decide What Your Vehicle Is Worth.
Total Loss. Diminished Value. Appraisal Clause Disputes.
We represent vehicle owners when insurance companies underpay.
The Appraisal Process for Auto Claims
The insurance appraisal process provides a method for resolving certain disputes over the amount of loss when a policyholder and insurance company cannot agree on the value of a covered vehicle loss or the amount necessary to repair the vehicle.
Appraisal rights and procedures can vary depending on the insurance policy and applicable state law. When appraisal is available and properly invoked, the policyholder and insurance company generally select separate appraisers to independently evaluate the disputed amount. If the appraisers cannot reach an agreement, the dispute may proceed to an umpire according to the applicable policy provisions and law.
Appraisal generally addresses the amount of loss rather than determining whether insurance coverage exists. Because policy language and state requirements vary, the specific appraisal provision should be reviewed before the process begins.
Key Takeaways
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Appraisal is a dispute-resolution process used to determine the amount of loss when appraisal is available under the insurance policy or applicable law.
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The policyholder and insurance company generally select separate appraisers to independently evaluate the disputed amount.
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When the appraisers cannot agree, an umpire may become involved according to the policy and applicable law.
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Appraisal procedures, deadlines, qualifications, costs, and the effect of an appraisal award can vary by policy and jurisdiction.
When Appraisal May Apply
Appraisal may be available when a policyholder and insurance company agree that a covered loss occurred but disagree about the amount of that loss. The specific availability and scope of appraisal depend on the insurance policy and applicable state law.
In automobile claims, appraisal may be relevant when there is a dispute over the Actual Cash Value (ACV) of a total loss, the amount necessary to properly repair a damaged vehicle, or another valuation issue that falls within the policy's appraisal provision.
Before invoking appraisal, the policy language should be reviewed carefully. Appraisal provisions can differ between insurance companies, policies, and jurisdictions, and those differences may affect when appraisal can be invoked and what issues the appraisers are authorized to determine.
How Appraisal Is Invoked
Appraisal generally begins when one party formally invokes the appraisal provision according to the requirements of the insurance policy or applicable law. The invocation should clearly identify the claim, the disputed amount of loss, and the policyholder's intent to proceed through appraisal.
Some policies establish specific procedures for invoking appraisal, including written notice requirements, deadlines, appraiser qualifications, or other conditions that must be satisfied. State law may also impose requirements that supplement or override portions of the policy language.
Because appraisal can affect important rights and deadlines, the applicable policy and jurisdiction should be reviewed before the process begins rather than assuming every appraisal follows the same procedure.
Selecting an Independent Appraiser
Once appraisal has been properly invoked, the parties generally select their respective appraisers according to the policy and applicable law. The appraiser's role is to independently evaluate the disputed amount of loss and develop a supportable opinion based on the vehicle, documentation, market evidence, repair requirements, and other information relevant to the assignment.
An appraiser should approach the assignment as an independent valuation professional rather than simply advocating for a predetermined number. The objective is to determine and support the appropriate amount of loss based on the evidence.
Appraiser qualification, independence, impartiality, disclosure, and compensation requirements can vary by policy and jurisdiction. Those requirements should be evaluated before an appraiser is selected.
What the Appraisers Do
Each appraiser independently investigates and evaluates the disputed amount of loss. Depending on the nature of the claim, this may involve reviewing valuation reports, repair estimates, photographs, vehicle specifications, market data, repair procedures, invoices, inspection findings, or other relevant documentation.
The appraisers may exchange information, discuss areas of disagreement, and attempt to reach an agreement regarding the amount of loss. Their analysis should be based on the evidence relevant to the claim rather than simply adopting the position initially presented by either party.
If the appraisers reach an agreement that satisfies the requirements of the policy and applicable law, the appraisal may be resolved without requiring an umpire.
When an Umpire Becomes Necessary
If the two appraisers cannot agree on the amount of loss, the appraisal process may provide for the involvement of an umpire. The procedures for selecting an umpire depend on the insurance policy and applicable law.
The umpire does not replace the two appraisers or automatically determine the outcome. Instead, the unresolved areas of disagreement are presented for further consideration according to the applicable appraisal procedure.
Depending on the policy and jurisdiction, an agreement between two members of the appraisal panel may establish the amount of loss. Requirements concerning umpire selection, qualifications, impartiality, fees, and deadlines can vary and should be reviewed before proceeding.
What an Appraisal Award Determines
An appraisal award establishes the amount of loss determined through the appraisal process to the extent provided by the insurance policy and applicable law.
The effect of an appraisal award can vary by jurisdiction and policy language. In some circumstances, a properly completed award may be binding as to the amount of loss, while other legal or coverage issues may remain outside the authority of the appraisal panel.
For that reason, an appraisal award should not automatically be interpreted as deciding every dispute associated with the insurance claim. The scope of the appraisal and the authority granted to the appraisers should be evaluated separately from questions involving policy coverage or other legal issues.
Total Loss Appraisal
In a total loss dispute, appraisal may be used to determine the Actual Cash Value (ACV) or other applicable measure of vehicle value when the policyholder and insurance company disagree about the amount of loss.
A total loss appraisal may involve reviewing the vehicle's year, make, model, trim level, mileage, condition, equipment, options, packages, prior history, geographic market, comparable vehicles, and adjustments contained within the insurance company's valuation.
The objective is not simply to locate vehicles advertised at higher prices. A supportable appraisal should determine the value of the specific loss vehicle using relevant and verifiable market evidence while accounting for meaningful differences between the subject vehicle and the available comparable vehicles.
Repair-Cost Appraisal
Depending on the policy and applicable law, appraisal may also be available when the dispute concerns the amount necessary to repair a covered vehicle rather than its total loss value.
A repair-cost appraisal may involve evaluating the scope of damage, repair methodology, labor operations, parts, refinishing requirements, manufacturer procedures, diagnostic or calibration requirements, and other documented costs associated with restoring the vehicle.
The purpose of the appraisal is to determine the amount of the covered loss within the scope of the appraisal process. Questions concerning whether a particular loss or category of damage is covered under the policy may remain separate from determining the appropriate cost of repair.
Appraisal Rules Vary by State and Policy
There is no single appraisal procedure that applies identically to every automobile insurance claim in the United States. Appraisal rights can arise from insurance policy language, state statutes, regulations, case law, or a combination of these authorities.
Requirements involving invocation, deadlines, appraiser qualifications, impartiality, umpire selection, allocation of fees, and the effect of an appraisal award can differ substantially between jurisdictions and policies.
For this reason, the insurance policy and applicable state requirements should be reviewed for each individual claim before assuming that procedures used in another state or under another insurance policy will apply.
Texas Right to Appraisal
Texas has established specific Right to Appraisal requirements for certain automobile insurance claims. These requirements can provide policyholders with a statutory appraisal process for resolving qualifying disputes involving the amount of loss.
The Texas process does not mean that every disagreement with an insurance company automatically qualifies for appraisal. The type of policy, nature of the claim, disputed issue, applicable statutory requirements, and policy provisions should be reviewed before appraisal is invoked.
Texas law also contains requirements affecting the appraisal process that may differ from appraisal procedures used in other states. For that reason, a Texas automobile appraisal should be evaluated under the applicable Texas requirements rather than relying solely on general appraisal language or procedures used in another jurisdiction.
How Nexus Claim Services Handles Appraisal Assignments
Nexus Claim Services provides independent automobile appraisal services for vehicle owners involved in disputes concerning the amount of an insured vehicle loss.
Each assignment begins with a review of the insurance policy, available claim documentation, and the specific issue being submitted to appraisal. Depending on the dispute, the evaluation may include vehicle valuation reports, repair estimates, photographs, invoices, manufacturer repair information, vehicle specifications, market evidence, and other documentation relevant to determining the amount of loss.
The objective is to develop a vehicle-specific and supportable appraisal based on the available evidence rather than simply adopting the insurance company's position or selecting a predetermined amount requested by the vehicle owner.
When another appraiser has been selected, Nexus communicates with that appraiser regarding the disputed amount and supporting evidence in an effort to reach an agreement. When an agreement cannot be reached, the matter may proceed to an umpire according to the applicable insurance policy and law.
Considering Appraisal for Your Auto Claim?
If you disagree with an insurance company's valuation of your totaled vehicle or the amount being allowed for a covered vehicle repair, Nexus Claim Services can review the circumstances of the dispute and help determine whether appraisal may be an appropriate option.
Because appraisal rights and procedures vary by insurance policy and jurisdiction, the applicable policy provisions and claim circumstances should be reviewed before the appraisal process is started.