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Appraisal Clause

An Appraisal Clause is a provision in most US auto insurance policies that lets either you or the insurer demand an independent appraisal when you disagree on the value of a totaled vehicle. Each side selects a competent, independent appraiser; the two appraisers select an umpire; and the resulting valuation is binding.

More detail

  • Invoking the appraisal clause is the single most powerful tool a policyholder has when the insurer refuses to negotiate in good faith.
  • The clause language is standardized in many states but the procedural details vary — some states require the demand in writing, others allow oral invocation, some impose deadlines.
  • Costs are typically split: each party pays their own appraiser, and the umpire's fee is split 50/50.
  • An appraisal-clause award is generally binding on the actual cash value but does NOT decide coverage or liability questions.

Related terms

Umpire
In an appraisal-clause dispute, the Umpire is the neutral third party who breaks ties when the two appraisers (one selected by you, one by the insurer) cannot agree on the vehicle's value. The two appraisers jointly select the umpire; if they cannot agree, a court typically appoints one.
Binding Appraisal
A Binding Appraisal is the result produced by the appraisal-clause process. It is binding on the question of vehicle value but does NOT decide coverage, fault, or other policy questions. Once issued, both parties must accept the value and the insurer must pay it (subject to applicable deductibles).
Actual Cash Value (ACV)
Actual Cash Value is the dollar amount your insurance company is required to pay you for a totaled vehicle. ACV represents the price you would pay to buy a comparable used vehicle of the same make, model, year, mileage, and condition in your local market — not the vehicle's original price, replacement cost, or what you still owe on a loan.

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