Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney about your specific situation.
Understanding Diminished Value Claims in Texas
A diminished value claim seeks compensation when your vehicle’s resale value drops after a covered accident, even when repairs are complete. Insurers often make low settlement offers. If you believe the insurer’s diminished value offer is insufficient, you can invoke the appraisal clause in your policy to get an independent determination of loss.
Locating and Invoking the Appraisal Clause
1. Review Your Policy Appraisal Provision
Open your auto insurance policy and locate the appraisal clause, often under a section titled “Appraisal” or “Amount of Loss.” It typically states: “If you and we disagree on the amount of loss, either may demand an appraisal.” This clause is enforceable under Texas law (Texas Insurance Code §542.058).
2. Provide Written Appraisal Demand
Send a written “demand for appraisal” to your insurer. Include:
- Policy number and insured name.
- Description of the loss (diminished value).
- Your chosen appraiser’s name, address, and qualifications.
- Request that the insurer appoint its appraiser within a specified time (e.g., 20 days).
Send this via certified mail, return receipt requested, to create a record.
3. Select Appraisers and an Umpire
Once you demand appraisal:
- You hire your own qualified appraiser (often an auto damage appraiser or certified vehicle damage expert).
- The insurer appoints a second appraiser. If either appraiser fails to appear, the other can choose an umpire.
- If both appraisers appear but disagree on the loss amount, they select an impartial umpire. If they cannot agree on an umpire within a set period (commonly 15 days), either party may ask a state court or judge to appoint one.
4. Conducting the Appraisal and Binding Decision
The two appraisers and the umpire inspect your vehicle, review repair invoices, and assess diminished value. Each appraiser independently determines a figure. If the two figures differ, the umpire picks the final amount. The decision binds both you and the insurer.
Fees: You pay your appraiser; the insurer pays its appraiser. Umpire fees split evenly, unless your policy states otherwise.
Texas Law on Appraisal
Under Texas Insurance Code §542.058, appraisal is a contract-based right to resolve valuation disputes. Courts in Texas consistently enforce appraisal clauses to ensure fair, independent valuations.
Helpful Hints
- Act quickly: Check your policy for time limits on demanding appraisal.
- Choose an experienced appraiser familiar with diminished value methodologies.
- Keep detailed estimates, repair invoices, and pre‐accident vehicle valuations to support your position.
- Document all correspondence with the insurer and appraisers.
- If the insurer resists the appraisal process, consider filing a motion to compel appraisal in Texas state court.