Invoking the Appraisal Clause for Your Diminished Value Claim

How does the Appraisal Clause Work?

Once you have invoked the appraisal clause in writing, both parties must select a competent and disinterested appraiser. Once you have selected an appraiser, you must provide the other party (the insurance company) with the appraiser selected within 20 days after making the written demand. As previously mentioned, it may be a good idea to include this information in the written demand invoking the clause.

As soon as the appraisers are chosen and both parties receive the appraisers’ information, the process falls into the appraisers’ hands. Typically, both appraisers will need to inspect the vehicle. Once they do so, each will create their own diminished value reports and then will try to come up with an agreement as to the diminished value amount.

If the two appraisers cannot come to an agreement, they will hire another third-party disinterested appraiser to act as an umpire. If the appraisers cannot agree upon an umpire within 15 days, either you or the insurance adjuster may request that a magistrate, who is a resident in the county where your vehicle is registered or the county where the accident occurred, select the umpire. Once the umpire is selected, the appraisers will then submit their differences to the umpire. The umpire will prepare his or her own report determining a reasonable diminished value amount; however, the diminished value amount cannot be higher or lower than the determinations of the appraisers.

For example, if your appraiser values the diminished value claim at $4,000 and the appraiser for the insurance company values the claim at $3,000, then the umpire cannot value the claim lower than $3,000 or higher than $4,000. In other words, his value must fall with the $3,000-$4,000 range. With this being said, the umpire is able to accept a valuation of one appraiser over another. Thus, the umpire may decide to accept one appraiser’s valuation in full.

Once either an agreement is reached between the two appraisers or the umpire creates his report, the determination must be presented to both you and the insurance company. Once you have received the diminished value amount, you have 15 days to either accept or reject the determination.

Failure to reject the determination within the 15 days will be considered an acceptance and will become binding. A rejection must be sent to the adverse party (the insurance company) formally stating that you reject the appraisal clause diminished value amount.

IMPORTANT NOTE: Again, if the report or amount is not rejected within 15 days of the receipt of the diminished value determination, the report or amount will be binding for both you and the insurance company.

What is an Appraiser?

Essentially, an appraiser is someone who is certified by the state to give a proper valuation of your vehicle. Typically, most appraisers are able to provide you with the fair market value of your vehicle. In a diminished value claim, an appraiser will determine the fair market value of your vehicle both before and after the accident, and the difference will result in the diminished value amount that you may be entitled to claim. For more information on appraisers and how they work, please visit our article “Appraisers: who they are and how they determine the value of your vehicle.”

Who Pays for the Appraiser?

Each individual party is responsible for covering the cost of their appraiser. In other words, once you invoke the clause, you will be responsible for paying the appraiser you choose to handle the process. If an umpire is needed, then both you and the insurance provider share the cost of the umpire equally. To view a list of appraisers licensed in North Carolina, please visit our article “NC Appraisers.”

Invoking the appraisal clause can be helpful, as third parties handle the negotiations. With this being said, it may be a good idea to speak with an attorney in your area to determine whether or not invoking the clause is in your best interest. Please feel free to use our Lawyer Locator service to find an attorney who could potentially help with your claim.