Glossary

Appraisal clause

A policy provision letting you or the insurer call in independent appraisers, plus an umpire if needed, to settle a dispute over the amount of a loss.

Also called: appraisal provision, right of appraisal, appraisal process

An appraisal clause is a section of many auto policies' physical damage coverage that sets out a way to resolve disagreements over how much a covered loss is worth without going to court. It applies to the amount of the loss, such as a car's actual cash value or the cost of repairs, not to whether the loss is covered at all.

The usual process: either side demands appraisal in writing, and each hires its own appraiser. The two appraisers try to agree on the amount. If they cannot, they submit their differences to an umpire, chosen jointly or appointed by a court, and an award agreed to by any two of the three sets the amount. Each side typically pays its own appraiser and splits the umpire's fee.

Appraisal is most useful in total loss disputes where you and the claims adjuster are a few thousand dollars apart and you have comparable sales to support your number. Weigh the cost of an appraiser against the gap. Not every policy includes the clause, and states regulate it differently; Washington, for example, now has its insurance commissioner register appraisal umpires. If the insurer is denying coverage rather than disputing value, appraisal is the wrong tool, and a complaint to your state or legal advice may be the next step.

Last reviewed October 4, 2026

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Related terms

Actual cash value What a car was worth just before a loss — replacement cost minus depreciation — and the basis of most total-loss payouts. Total loss A car so badly damaged that repairs would cost more than it is worth, or more than a state threshold, so the insurer pays its value instead. Claims adjuster The insurance company employee or contractor who investigates a claim, decides what the policy covers and sets how much is paid. Bad faith An insurer's unreasonable handling of a claim, such as denying, delaying or underpaying without a proper basis, which can expose it to damages. State department of insurance The state agency that licenses insurers and agents, reviews rates and policy forms, monitors solvency and handles consumer complaints.

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