It is never easy when you believe your car’s value has been underestimated by your insurance company. And disagreeing with the valuation of the insurance provider can be frustrating, but before you accept the settlement, there’s a clause included in most insurance policies that can help you get the compensation you deserve. The Appraisal Clause Auto Insurance option allows both you and the insurer to bring in independent appraisers to determine the exact value of your vehicle.
What is an Appraisal Clause in Auto Insurance?
An appraisal clause is found in many insurance contracts and allows either party to voluntarily use this procedure as an alternative way of resolving their differences when they disagree with one another regarding something under the insured’s insurance policy. When both the insured and insurer can agree on the issue of insurance coverage, but there is a disagreement between them as to how much total loss has occurred, then typically the insured can file an appraisal request.
What is the Appraisal Process?
The insured can begin appraisals with an appraisal report from their independent appraiser (IA) and a demand letter to the insurer; the contract also allows for an appraisal by the insurer. When invoking the appraisal clause, either party can initiate the process. For example, the insured typically starts the appraisal process by way of submitting an independent appraisal (IA) report to the insurer along with a demand letter referencing the appraisal clause in the insurance policy.. This stage can either result in the adjuster hiring their own IA to evaluate the vehicle or in the adjuster realizing their mistake, raising their offer, reaching a compromise, and settling the claim. The claim is settled when the two appraisers come to an agreement regarding the valuation and a document is signed, which is binding on all parties; or the appraisers are unable to reach an agreement, which results in a standoff.
What Happens if the Appraisers Cannot come to an Agreement?
When the appraisers are unable to come to an agreement regarding the vehicle’s lost value, they appoint an impartial third-party appraiser. Following the assessment of the appraisers’ evaluations, the external appraiser delivers a verdict. The decision made by the umpire is conclusive if at least one of the appraisers endorses it. Signing of this agreement shall require signature of both a third-party appraisal company and at least one of the Independent Appraisers (IA). Legal or policy related actions may follow based on outcome, should neither the IA’s agree to the impartiality of the third party appraiser.
What are the Benefits of Invoking the Appraisal Clause?
Among the many advantages of invoking the appraisal clause and starting the procedure are its speed, relative affordability, and often a more diplomatic nature of conflict resolution. The policyholder can choose an unbiased, qualified appraiser who is knowledgeable about the particular dispute at hand and can support the policyholder in arguing for the maximum amount of compensation to be awarded. An appraisal will enable the parties to settle the disagreement without the necessity for months of discovery followed by a jury trial when it is merely a contest between opposing valuation experts. Furthermore, if the insured’s valuation reasons are intricate or challenging, an appraisal may in some cases, result in larger compensation for the insured party.
Navigating a diminished value claim dispute doesn’t have to be stressful. The appraisal clause is a valuable tool that helps ensure you receive a fair settlement based on your vehicle’s true value. If you’re unsure of how to start your appraisal process or need expert help managing your claims process, the professionals at ADR Claims are there to guide you every step of the way.
