What is the "Appraisal Clause" for Diminished Value Claims?

Before answering that question, it's important to know if you should even be invoking the appraisal clause, or whether you have a "first-party" or "third-party" claim.

• First Party - You are at fault for the crash, or there is a dispute as to who is at fault for the crash. Therefore, you are having to deal with your own insurance company. Also, if someone hits you and is at fault, but they also have the same insurance company, it would be a first-party claim. When you have a first-party claim, your claim would technically be a breach of contract when they fail to pay you.

• Third-Party - Someone else hit you and is clearly at fault for the crash. Third-Party claims are "tort" claims. A tort is when someone wrongs you and causes you damage. For a tort claim, we have to file a complaint in magistrate court in whatever county the Defendant (person that hit you) lives.

Each insurance company has its own contracts, but most large insurers have something called an "Appraisal Clause." Knowing whether your insurance has an appraisal clause can be figured out by letting us review your policy, or simply asking the adjuster in charge of your case.

Most Appraisal Clauses are parts of the contract that state something similar to this:

If you disagree with the diminished value amount that we (the insurance company) have reached, likely using the 17(c) formula, then you must invoke this clause. To invoke, you have to hire your own independent expert (which we would do for you) and send an expert appraisal. The insurance company will also hire its own independent appraiser. The two experts try to come to an agreement. If they reach an agreement, then that is the settlement value.

If they can't reach an agreement, each party splits the cost of an "umpire." An umpire is usually another independent appraiser. He reviews both reports and issues a final ruling as to the value. Getting the right Umpire is crucial, not letting the insurance companies choose an Umpire that will side with them is where you, as the individual, can tank the value of your case. Most of the time, especially with an experienced negotiator, cases don't get this far in the appraisal clause because the insurance companies are fearful of a poor decision.

Of course, give us a call to help you with your case, or just ask questions about the process. 770-557-2838.