When your car is damaged and you file an insurance claim, you expect a fair payout. But what happens when you and your insurer can’t agree on how much the damage will cost to repair? That’s where the right to appraisal comes in. Built into many auto insurance policies, the appraisal clause offers a formal way to settle disputes over the value of a loss – without taking legal action.
Instead of going to court, you and your insurer hire independent appraisers to assess the damage. If they disagree, a neutral umpire makes the final call. This process ensures a balanced resolution and helps protect you from receiving less than your vehicle is worth.
A car insurance appraisal clause is essential because it provides a path to resolve insurance claim disputes without lawsuits. If you have car insurance, this right helps you close the gap in valuations to ensure a fair settlement.
CarInsurance.com Insights
- The right to appraisal is a clause in car insurance policies that protects consumers.
- It’s an alternative way to settle disputes when you disagree with your insurance company’s loss valuation.
- When a policyholder invokes their right to appraisal, the insurance company must allow third-party appraisers to value the loss.
- While some insurance companies are trying to drop this right from policies, Texas and Washington have passed laws to preserve it.
What is the right to appraisal in auto insurance?
In auto insurance, the right to appraisal (RTA) is a policyholder’s right to an alternative dispute resolution when their loss valuation differs from the insurance company’s. In a typical appraisal process, each party chooses an appraiser and both appraisers select an umpire who will be the deciding vote in the question of valuation, according to the National Association of Insurance Commissioners (NAIC). If you want to exercise your right to appraisal, you’ll usually have to provide the demand to your insurance company in writing.
Drivers might invoke their right to appraisal in auto insurance during total loss disputes or disagreements about repair costs.
Blake Corley, a personal injury attorney with Daly & Black in New Orleans, says using the right to appraisal can sometimes save drivers thousands of dollars.
“I represented a client who was badly injured in an automobile collision, and their car was totaled in the crash,” he said. “The insurance company was offering thousands less than what the car was actually worth. I invoked the appraisal clause, brought in a neutral third party, and ended up getting a payout that was about 30% higher than the insurer’s original offer.”
Without the appraisal clause, the client would have had to accept the lower offer or fight a long legal battle.
“Simply put, that clause leveled the playing field,” he said.
Expert Tip
Right to appraisal matters when choosing coverage. Some insurance providers are removing the right to appraisal from their auto policies, leaving policyholders without this essential recourse during disagreements on the value of a loss.
Why are insurers removing appraisal clauses from policies?
Auto insurance companies are facing increased costs, including labor and materials for vehicle repair and replacement, litigation costs and higher reinsurance costs. According to the Insurance Information Institute (Triple-I), insurers paid out more than $1.10 for every $1 in premium they collected in 2023, on average.
Meanwhile, claims and disputes are rising in frequency. A study from the American Property Casualty Insurance Association (APCIA) also points out how increased litigation, riskier driving habits and more severe injuries drive up costs and premiums.
By removing appraisal clauses from auto insurance policies, car insurance companies can reduce the time and expense of mediating claims disputes. It also means that policyholders either have to accept a potentially lower claim payout or pay for the loss out of pocket.
Consumer impact: What happens if your insurer drops the right to appraisal?
If your insurance carrier drops the right to appraisal from your auto policy, you’ll have fewer options to challenge insurer valuations. If you disagree with a valuation and think it’s too low, your ability to dispute it with your insurer through a third party is constrained. And without a third party in your corner, you’ll have much less leverage when going after a fair settlement.
By removing the right to appraisal as an alternative, your two pathways to resolution will be litigating the dispute or settling for a lowball offer.
Legislative response: New laws protecting appraisal rights
Some consumer advocacy groups are fighting to protect policyholders’ appraisal rights.
- In Texas, where some insurers dropped the right to appraisal from their policies, a new law will go into effect September 1 to preserve it. Known as Senate Bill 458 (2025), this bipartisan law requires auto insurers to include a binding appraisal clause in every policy.
- In Washington, Senate Bill 5721 puts forth the same requirement. The state’s governor signed the Democrat-sponsored bill, which goes into effect July 27, 2025.
These laws enhance consumer protections and preserve claim fairness for policyholders. Without increased consumer complaints and advocacy pressure from groups like Texas Watch, state governments may not have stepped in so decisively to protect consumers.
How to check if your policy has an appraisal clause
Review your declarations page and policy wording to check whether your auto insurance policy contains an appraisal clause. You can also ask your agent or insurer directly.
When shopping for coverage, compare policies carefully to be sure this clause is included.
CarInsurance.com Insight
Not all policies offer the same dispute resolution options — know before you buy.
Alternatives to right to appraisal if your policy doesn’t include it
If your policy doesn’t include a right to appraisal and your insurer is low-balling you, you can try a few things.
- Negotiation: Gather as much supporting evidence as possible, then try negotiating with the insurance adjuster. Receipts and data can give you more leverage when presenting your case.
- Mediation or arbitration: If your insurance company offers it, you can enter mediation or arbitration to reach an agreement. Both options use a neutral third party to help. The agreement is a suggestion in mediation, and in arbitration, it’s binding.
- Legal action: If you’re not seeing results and believe the insurance company is acting in bad faith, you could bring a lawsuit against them. This method has its pros and cons. You might be able to recover the actual value of your loss, plus other costs (in some circumstances). However, hiring an experienced attorney can be expensive, and taking your suit to trial can take months or even years.
How to choose a policy with strong dispute protections
Choosing an RTA insurance policy with strong protections built in can help you when you file a claim. Look for policies that contain clear language about your right to appraisal. Ask your agent if you have any questions about the terms and what they mean.
Do your research before signing up for a policy. Consider the insurer’s overall claims service reputation and read reviews that detail other customers’ claims experience. If you see a pattern of poor customer service and troubles with filing claims, steer clear.
Finally, weigh the policy’s cost against the coverage’s quality. Cheap car insurance may save you money if you never file a claim, but it is worth paying extra for dependable service. That can help ensure you have a good experience if you do need to file a claim in the future. Sometimes a slightly higher premium buys you better claim protections.
FAQ
What is the right to appraisal in insurance?
The right to appraisal in car insurance provides an alternative method of resolving insurance disputes. When you disagree with your insurance provider about the value of a loss, you each can hire an appraiser to judge the value and make the final decision.
Can I add appraisal rights to my policy?
If a particular policy doesn’t have the right to appraisal included in the policy language, don’t expect the insurer to add it. Instead, you can switch to a policy that includes these protections.
Do all states require appraisal clauses?
No, the right to appraisal is not mandatory in all states. Most states don’t require this protection. Texas and Washington are two exceptions, where the state legislatures passed a law requiring insurers to provide consumers with the right to appraisal.
How do new Texas and Washington laws affect insurers?
In these states, insurers must include binding appraisal language in all policies after the enforcement date (January 1, 2026, in Texas; July 27, 2025, in Washington). Insurance companies can’t avoid or delay the appraisal process, and the results are final.
Resources & Methodology
Sources
- National Association of Insurance Commissioners. “Property insurance claim appraisals.” Accessed July 2025.
- Texas State Legislature. “S.B. No. 458.” Accessed July 2025.
- Washington State Legislature. “SB 5721.” Accessed July 2025.
- Insurance Business Magazine. “New APCIA study examines rising challenges for the auto insurance space.” Accessed July 2025.
- Insurance Information Institute. “What should I do if I am having trouble settling my claim?” Accessed July 2025.
- United Policyholders. “What to expect when you’re suing an insurance company.” Accessed July 2025.
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