Detailed Answer
If your insurer’s diminished value offer feels too low, Tennessee law and your insurance contract may let you invoke the appraisal clause. An appraisal clause is a built-in process—separate from litigation—that lets you and your insurer each hire a neutral expert (appraiser) to assess the loss. If the two appraisers disagree, they select an umpire to decide. The umpire’s decision on the amount of loss generally binds both parties.
1. Review Your Policy and Identify the Appraisal Clause
Locate the appraisal provision in your auto insurance policy, often under “Loss Settlement,” “How We Settle a Loss,” or “Appraisal.” The clause typically states:
- Each party selects a qualified appraiser.
- Appraisers agree on an umpire or ask a court to appoint one.
- Each party pays its own appraiser and splits umpire fees.
- The umpire’s award is binding on the amount of loss.
No Tennessee statute mandates appraisal; it’s strictly contractual. Courts enforce appraisal clauses according to their terms (see Jones v. State Farm, 974 S.W.2d 228 (Tenn. Ct. App. 1997)).
2. Send a Written Demand for Appraisal
Follow your policy’s notice requirements. Typically, you must send a written notice to your adjuster or the claims department stating you “invoke the appraisal clause” to resolve the disputed loss amount. Include:
- Your name, policy number, and claim number.
- A statement that you request appraisal under the policy.
- Your contact information and proposed deadline (often 20–30 days).
Send the demand via certified mail or another trackable method.
3. Appraiser Selection and Umpire Process
- Within the time frame in your policy, select a qualified appraiser and notify the insurer in writing.
- The insurer will appoint its own appraiser.
- Appraisers must jointly select an impartial umpire. If they can’t agree within a set period (e.g., 15 days), ask a local court to appoint one.
Each appraiser inspects the vehicle, reviews repair estimates and diminished value methodologies, then submits a written appraisal. If the two figures differ, the umpire reviews both and issues a final award.
4. Binding Award and Payment
Once the umpire issues the award, the insurer must pay the amount determined for diminished value, minus any deductible. Tennessee’s Unfair Claims Settlement Practices Act, Tenn. Code Ann. § 56-6-113, prohibits insurers from unreasonably delaying or denying payments after appraisal.
5. Hypothetical Scenario
Pat car was rear-ended, reducing its market value by $3,500, but the insurer offered only $1,000. Pat invokes appraisal, hires an appraiser, and triggers the umpire process. The umpire awards $3,200 in diminished value. The insurer pays Pat $3,200 less the deductible.
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for advice on your specific situation.
Helpful Hints
- Act promptly: appraisal clauses often have strict time limits.
- Keep written records of all communications and mailing receipts.
- Choose an appraiser knowledgeable in diminished value methodology.
- Verify the appraisal clause’s deadlines and fee-splitting rules.
- Consider consulting a Tennessee attorney if the insurer resists appraisal.
References
- Tennessee Code Annotated § 56-6-113 (Unfair Claims Settlement Practices): law.justia.com
- Tennessee Department of Commerce & Insurance: tn.gov/commerce/insurance
- Jones v. State Farm, 974 S.W.2d 228 (Tenn. Ct. App. 1997)