Invoking the Insurance Appraisal Clause to Challenge a Low Diminished Value Offer

Disclaimer: This article is for informational purposes only and does not constitute legal advice. You should consult a qualified attorney or your insurer for guidance on your specific situation.

Detailed Answer

When an insurer’s diminished value offer seems unreasonably low, you can activate the appraisal clause in your auto insurance policy. Under Indiana law, appraisal is a contractual remedy that lets you and the insurer each appoint a neutral appraiser. Those two appraisers then select an umpire to resolve any disagreement. The umpire’s decision on the vehicle’s diminished value is binding.

1. Review Your Insurance Policy

Locate the appraisal clause in your policy—often in the “Loss Settlement” section. Confirm the steps you must follow, any required forms, and deadlines.

2. Send a Written Demand for Appraisal

Submit a written demand to your insurer stating you dispute the diminished value offer and request appraisal. Include:

• Policy number and claim number
• Statement of disagreement
• Reference to the appraisal clause
• Date and your contact information

3. Appraiser Selection

Within the timeframe specified in your policy (commonly 30 days), both you and the insurer appoint independent appraisers. Choose a qualified auto damage appraiser experienced in diminished value calculations.

4. Umpire Appointment

If your two appraisers cannot agree on the diminished value amount, they must select a neutral umpire. If they fail to agree on an umpire within a set period, either party can ask a court to appoint one.

5. Binding Decision and Cost Allocation

The appraisers and umpire determine the vehicle’s diminished value. Their written award is final and binding. Typically, you and the insurer share appraisal fees and the umpire’s cost equally, unless your policy states otherwise.

6. Enforcing the Appraisal Award

If the insurer refuses to pay the appraisal award, you may file a petition in Indiana circuit or superior court to confirm the award and obtain a judgment for the amount determined.

Note: Under Indiana’s Unfair Claim Settlement Practices Act, insurers must attempt in good faith to settle claims promptly and fairly. See Indiana Code §27-4-1-2: https://iga.in.gov/legislative/laws/2023/ic/titles/027#27-4-1-2

Helpful Hints

• Act quickly: Observe all policy deadlines for demanding appraisal.
• Document everything: Keep copies of letters, emails, and appraisal reports.
• Use qualified professionals: Select appraisers with auto valuation and diminished value experience.
• Understand costs: Check your policy for fee-splitting rules before you start.
• Consider legal help: If the insurer fails to honor the umpire’s decision, consult an attorney to confirm the appraisal award in court.