Appraisal Clause? Unethical/Incompetent Appraiser? Bad Faith? What the Heck?

July 8, 2021By Justin Petty No Comments

When a case like the one I am about to describe happens, it is hard for me to understand.  If you’ve ever been in a dispute with an insurance company over the value of your automobile, then you know it can be a daunting task to get a fair settlement. 

In a first party claim (where you’re making a claim against your own insurance company), if there’s a dispute, there’s normally a remedy written into the policy called “Appraisal”.  Using this term is a bit tricky because, in most cases, the “Appraisal” remedy does not officially involve a written appraisal.  Instead, when the dispute arises, either the insured or the insurance company can demand “Appraisal”, which is not the same as demanding “an” appraisal. 

Appraisal as it is used in the policy means that each side picks an independent appraiser, and those two appraisers attempt to settle the dispute.  If the appraisers can’t settle the dispute, they attempt to agree on an umpire (third appraiser) who will then try to resolve the dispute by seeing if they agree with either appraiser.  Any two out of the three that agree to an award will bind the company and the insured to the award amount.

In the case that is the subject of this article, the insured owned a 1994 Nissan Avenir.  Never heard of it?  Yeah, me either, and I’m an auto appraiser, lol.  Anyway, the vehicle is a right-hand drive utility wagon.  It reminds me a bit of a Subaru Outback Wagon from the mid 1990’s.  This particular vehicle was very clean and had very low miles (only 41,459 miles).  The dealer where the owner bought it had it shipped over from Japan in 2019.  In October of 2019, the vehicle was purchased for $6495.00.  This was a pretty good price at the time.  The vehicle is old enough that it does not have to meet the same stringent requirements in customs that newer vehicles do.  So long as a shipping container can be obtained, then a dealer that is familiar with the Japanese market (where these right hand vehicles come from) can get one delivered for about $2500.00 (at least you could in October of 2019, before Covid 19 hit the world).

After the customer (who is an employee of the U.S. Postal Service) purchased the vehicle, she got to enjoy its reliability and practicality for a little less than a year before it was in a collision and deemed to be totaled by her insurance company (September of 2020).  The insurance carrier, had their adjuster fill out the CCC valuation form to get a settlement value (you can read about CCC in some of my other articles), and once CCC did their thing and the owner fought for corrections, the offer for the vehicle was $4478.00.  

Don’t forget, this offer was AFTER the owner had argued with the adjuster to get them to give her credit for options that the vehicle had which they had not originally inputted in the CCC portal.  Unfortunately, even after arguing and reasoning and pointing out the reality that the offer was not fair, her carrier refused to negotiate and forced their customer to invoke the appraisal provision of her policy. 

She did her research, hired me and named me as her appraiser, and we were able to get her carrier to name their appraiser.  In typical fashion, the adjuster handling the claim was sorely unfamiliar with the appraisal clause process and how it’s officially navigated.  I can’t image that carrier provided any training for appraisal clause cases.  I have rarely dealt with any insurance company employee that was properly educated on the subject.  Nevertheless, 10 days after the customer invoked the appraisal clause, the carrier named an appraiser with whom I was familiar.  

At this point, since the other appraiser has been named, we’re supposed to discuss the loss amount and state our values.  Instead, the other appraiser did something typical of an appraiser taking direction from an insurance company and delayed the claim by requesting information that is not part of the appraisal process, pretending all the while that it is required.  The appraiser was clearly working for, and with, the insurance company to try and keep the claim expense down, without regard to the actual value of the property. 

The company that the other appraiser works for is an appraisal company that seems to work exclusively for insurance companies.  All the appraisers seem trained to be yes men for the insurance company clientele to which they cater.  They do not seem to realize or care that they further victimize vehicle owners who have already been bullied by their carrier.  I’ve been in business for myself over 12 years and working in auto claims for over 23, and my experience with this appraisal company and all of their appraisers (there’s about 4 of them that are all related), is that they are controlled by the insurance companies that hire them and are not truly independent.

Although the evidence points to them primarily working for the insurance company, I have been able to settle claims with them in the past, so I always try to give the appraisal company (even these snotty ones) the benefit of the doubt and discuss any case with them to see if we can settle it.  Sometimes, because most carrier-oriented appraisal companies are not selecting comparable vehicles consistently, the initial number that the carrier’s appraiser comes up with is close enough to the real value that we can negotiate a little bit and settle the claim.  Unfortunately, this appraisal company’s inconsistency is inconsistent and creates a realistic value scenario rarely and sporadically.  In this case, the other appraiser placed a value on the Avenir of $3353.56.  This is $1125.00 LOWER than the insurance company had already offered!

On top of that, the only comparable vehicle that the other appraiser located was still in Japan.  Of course he did not account for any delivery costs to get it to the U.S..  After I saw his initial number, I emailed him saying that I couldn’t find any good comps in the U.S., but that my research indicated that the vehicle was valued at between $6500.00 and $7500.00.  I did a lot of research and even called the dealer where vehicle was purchased.  Because of Covid, the value of this vehicle increased from the time it was purchased until the accident.  Covid caused a dramatic increase in shipping costs and, when the accident occurred (when the value must be measured), it was worth even more than she paid for it a year earlier.  I tried multiple times to get the other appraiser to agree to a value of $6500.00.  He refused to even discuss the value and without doing any additional research or even discussing what I found, he stated, “I don’t think I can come near that figure for just the value of the car alone based on what I found.  I have attached my umpire list for your review.”

So. . . . 1) he found nothing comparable, 2) he did minimal research, 3) he refused to negotiate, and then 4) he sent me a list of umpires.  I tried diligently to get him to agree to $6500.00.  He wouldn’t discuss, insisting we cost both of our customers more money and go straight to an umpire.  Although I can never trust an umpire to be fair, because of the strength of the research I had, I took a risk and agreed to an umpire.

Now for the perplexing part. . . . 

We both provided our arguments to the umpire via email.  I heard nothing for a couple of days.  Then, all of the sudden, one day short of 90 days after the insured invoked the appraisal clause, the appraiser for the insurance company and the umpire signed an award for $7235.50 reflecting the ACV of the 1994 Nissan Avenir.  Nobody discussed it with me at all.

Let me re-cap that for you again. . . 

The customer’s carrier made a low offer on a total loss of $4478.00, so the customer invoked the appraisal clause to dispute the low offer.  Then, the insurance company’s “independent” appraiser suggested a value of $3353.56 ($1125.00 LOWER than the original carrier offer).  As the appraiser selected by the insured, I placed a value of between $6500 and $7500 on the vehicle and attempted to get the insurance company’s appraiser to agree to $6500.00, more than once.  The insurance company’s appraiser refused to negotiate with me and made dilatory requests, unrelated to the formal appraisal process.  His actions forced both the insurance company and the insured party to pay an additional fee to an umpire.  All this just to immediately agree with the umpire to a value that was higher than I offered to agree to!  I guess just the threat of having to talk to me was enough to get the appraiser in line.  I mean, what was the point!?

If you want to know the names of the insurance company and appraisers and appraisal company referenced in this article, call my office.  I’ll tell you straight up and you’ll know who to avoid!  If you’re an insurance company playing games with your customers that invoke the appraisal clause, beware.  

Whether you’re a vehicle owner, claims professional, or attorney, if you have questions about how the appraisal clause works or need help with anything regarding the property damage portion of an insurance claim, please call our office at 214-227-2154 and select option 1 to get a live person, and we’ll do our best to help you, or refer you to somebody that can!  Information is always free at Petty Details, LLC! 

DISCLAIMER:  

Nothing in this article is to be construed as legal advice.  Although the vast majority of policies contain a clause like the one described in this article, there can be differences in the process and rights based on the specific language of each policy.  

Wanna talk about the appraisal clause?

Reach out below!

Appraisal Clause results in fair value for owner!

December 12, 2018By Jen Petty

Sometimes, when you invoke the appraisal clause, the two appraisers get in a sticky situation where they don’t agree and one tries to make up unwritten rules on the idea of “that is what we have always done”. 

This case was one of those. 

The owner had been through a pretty horrific hail storm and his new vehicle was totaled in the process.  When he got his offer, he felt like it was pretty low.  We took a look and agreed that his valuation contained the typical problems they normally do and seemed to be several thousand dollars off.

Total Loss After Auto Accident – Do it Yourself Insider Secrets

October 2, 2018By Justin Petty

If you would like to get a fair settlement for the total loss of your auto, you have found the right article. It will take a little work, but I think I can shed a little light on what you need to know in order to get a fair settlement.

As the owner of an appraisal and claim service company as well as a former licensed adjuster who has settled thousands of total loss claims, I will reveal the tricks to getting an insurance company to take you seriously.

In this article, I will dispel common misconceptions on total losses, tell you how to argue with computer programs and formulas, and give step-by-step instructions on how to best support your claim to get it settled.

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Does A Total Loss Have Diminished Value?

August 20, 2018By Justin Petty

Short Answer: No!

I think most people get this, but I get this question all the time, so I am writing this article in an attempt to properly explain why a total loss settlement does not include diminished value.

First, let us define Diminished Value:

Diminished Value is the loss in re-sale value of a vehicle after it has been in a wreck and then repaired.

Second, let us define Total Loss:

A Total Loss occurs when the insurance company decides that they are not going to repair your vehicle.

There are a few things to realize when you are dealing with an auto claim.

Appraisal Clause: Deceptive Practices by Insurance Companies

October 23, 2017By Justin Petty

Total Loss Disputes

If you’ve done some Googling because of a total loss dispute with your insurance company, you probably came across information explaining your right to appraisal (also called the invoking the Appraisal Clause).

Unfortunately, because auto total loss disputes are usually less than $10,000.00, it is an area that hasn’t traditionally attracted attorneys (but there are a few attorneys that will fight for you).

In fact, because the amounts in dispute are typically under $10,000.00, most insurance companies don’t even train their claims staff about the appraisal clause. 

I know. 

I was an adjuster for over a decade and NOT EVEN ONCE was the appraisal clause mentioned.  If you invoke the appraisal clause, you can bet that you will be dealing with a claims representative that has no clue what they are doing (if you’re an adjuster that thinks you know better, prove it).  

I educate adjusters and insurance carriers every week about this little known right that their insureds have.

Total Loss Due To Flooding? How Victims Can Fight A Low Offer by Invoking the Appraisal Clause

September 5, 2017By Justin Petty

Prove a point on your total loss due to flooding after Hurricane Harvey with the Appraisal Clause

If you’re a victim of the recent flooding in South Texas and have a total loss due to flooding with your carrier, you should call our office immediately and make sure that any offer you get is fair and reasonable.

Now that South Texas is dealing with the aftermath of Hurricane Harvey and Florida and Georgia brace for the impact of category 5 Hurricane Irma, victims will undoubtedly be dealing with total loss claims in exponential numbers and they need to know that insurance companies routinely handle these claims in a very dogmatic manner.

The biggest tactic is for a carrier to simply refuse to negotiate.

They will simply tell you, “take it or leave it”.

They like to claim that they do not have the authority to negotiate outside of their captive company market reports.

This is completely untrue and you can fight it.

Insurance company refuses to total my vehicle but I want it totaled – what can I do?

April 11, 2016By Justin Petty

What if I want to total my vehicle but the insurance company refuses to total?

Frankly, I’m surprised that I don’t get asked the title question more often, but I know why I don’t.  Simply put, it is the dogmatic way insurance adjusters explain the total loss or repair process to accident victims.

From the onset of dealing with most adjusters, the tone is set by the adjuster that what they say is how it is.  Most simply TELL people how it is.  The art of negotiation is lost and with it, common sense. 

This isn’t their fault; their supervisor told them how it was when they started and as they trained.  But don’t blame the supervisor because his manager told him how it was when he started.  But don’t blame the manager. . . you see where I am going with this? 

It is a mindset drilled into adjusters that THEY are the ones that decide if a vehicle is totaled or not.  They are sadly mistaken.

So, listen, it is YOUR vehicle. 

YOURS. 

Not theirs. 

YOU decide what to do with it, not them.  Remind them of this if you disagree with them.  Ask them whose name is on the title.  After you have cleared up the issue of ownership and ultimate control over the destiny of your vehicle, then you have to implement a plan to bring the destiny to reality.

Total Loss Settlement Tips

January 4, 2016By Justin Petty

The Petty Details of Total Losses

What should you do when you are dealing with a total loss?  

We get so many questions every day from people involved in an accident where their vehicle was totaled and they are now getting a low offer from the insurance company and just don’t know what to do next.  

We always tell them that it is always a negotiation and that they have to fight and prove their points with the information we are revealing below today!  

We put together some total loss settlement tips to get you moving in the right direction on your auto claim.

Our NEW DIMINISHED VALUE WEBSITE! Thanks for your support!

March 9, 2014By Jen Petty

The NEW Petty Details Diminished Value website – https://diminishedvalueexpert.com!

We are proud to show off our hard work with the launch today of our new website (which you have obviously found if you are reading this.)

diminished value expert

We have made it a mission to make our resources easily available to provide the most people with free information about their diminished value, total loss claims and tons of other topics.

Find out:

  • How to make a diminished value demand
  • How much your diminished value claim is worth
  • If your total loss is worth fighting for
  • How much your injury might be worth
  • The small claims court process

We have compiled all of the free help we’ve given over the years here on our new website to make it easy for auto accident victims to find the answers they need to make an informed decision when dealing with their insurance claim.

We thank you for your support over the last 5 years and we are ready to give you more free information than ever to help get your diminished value and total loss claims resolved as painlessly as possible!  You won’t believe our customer service because we truly do focus on each individual claim and spend all the time it takes to answer your questions right up front to make sure you feel confident moving forward with our help.  We stay by your side throughout the process so you will never wonder who to call when you don’t know the next step.  Rely on Petty Details for the real expert help you need with your diminished value, total loss or small claims issues – our success rate is the highest because we don’t give up!

CHECK OUT OUR NEW SITE TODAY!

Browse around and let us know what you think and we can’t wait to hear your feedback!