Detailed Answer
What Is an Appraisal Clause?
Most auto and property insurance policies sold in Pennsylvania include an appraisal clause. This clause lets you and your insurer hire independent appraisers to value disputed losses—like diminished vehicle value—without filing a lawsuit. Once both appraisers agree on value, or select an umpire to decide, that determination becomes binding on the amount of loss.
How Appraisal Differs from Coverage Disputes
Appraisal addresses “how much” you’re owed, not “if” you’re owed. You can only invoke appraisal when the insurer accepts coverage but offers a low payout. If your insurer denies coverage entirely, you must challenge that denial through a separate process.
Step-by-Step: Invoking Appraisal Under Pennsylvania Law
- Review Your Policy
Locate the appraisal clause, usually under a section labeled “Conditions” or “Loss Settlement.” Confirm it covers diminished value claims. - Send a Written Demand
Within any policy deadlines, mail or email a written appraisal demand to your adjuster or the insurer’s claims department. Quote the appraisal clause and state you dispute the insurer’s valuation. - Select Your Appraiser
Choose a qualified, independent appraiser experienced in diminished value. Provide your appraiser’s name, address and credentials to the insurer. - Insurer Selects Its Appraiser
The insurer appoints a second appraiser. If either appraiser lacks expertise in diminished value, ask for a replacement. - Appraisers Confer
Your appraiser and the insurer’s appraiser inspect the vehicle, exchange reports and attempt to agree on the loss amount. - Umpire Appointment
If the two appraisers cannot agree, they jointly select an umpire. If they cannot agree on an umpire, either party may ask a court of competent jurisdiction to appoint one. - Decision and Binding Award
The umpire reviews both valuations and issues a binding award on the amount of diminished value. Each party typically bears its own appraiser costs and splits umpire fees. - Enforce or Challenge the Award
If the insurer refuses to pay the appraisal award, you can file a breach-of-contract action in state court to enforce it. Conversely, you generally cannot challenge the award’s amount unless there was fraud, bias or a procedural defect.
Relevant Pennsylvania Law
Pennsylvania’s Unfair Insurance Practices Act prohibits insurers from “misrepresenting facts or policy provisions” and from “failing to affirm or deny coverage promptly.” See 40 P.S. § 1171.5. An insurer’s unreasonable delay or refusal to honor an appraisal award may violate this statute.
Helpful Hints
- Document every step in writing—keep copies of letters, emails and appraisal reports.
- Check your policy’s time limits for demanding appraisal; missing a deadline may waive your right.
- Choose an appraiser with certifications in automotive damage and diminished value appraisal.
- Consider mediation before court if the insurer balks at paying the award.
- If you hit roadblocks, consult a Pennsylvania attorney experienced in insurance disputes.
Disclaimer
This article is for educational purposes only and is not legal advice. Always consult a licensed attorney for guidance on your specific situation.