Use of the appraisal clause has hit mainstream media news as a counter for consumers to consider in response to insurance carriers that refuse to pay for certain repairs or offer lower payment than what collision repair shops ask for to cover proper and safe repairs.
CBS Austin reported Thursday on one example of a billpayer dispute that played out over the course of several months in Central Texas this year.
In March, Sierra Herrera told the news outlet that she hit a deer on her way to work causing her to wreck her vehicle. Initially, the repair center that her vehicle was towed to said the repairs would take about 10 days until they discovered more damage. Finding underlying damage during disassembly isn’t uncommon in collision repair.
Waiting on parts added 30 days to Herrera’s vehicle repairs. But that wasn’t the only snag. She told CBS Austin that her insurance company, which she didn’t name, ended up refusing to pay above what they had already.
Many car insurance policies include an appraisal clause that policyholders can invoke to have a third-party appraisal done when they don’t agree with their carrier’s valuation of their vehicle or damages. Low valuations often lead to improper indemnification for loss, and in some cases can lead to total loss determinations on vehicles that could otherwise be fixed. Both the carrier and the policyholder hire an independent appraiser and if the appraisers can’t agree, an umpire is selected to make the final decision.
After invoking the appraisal clause in her policy, CBS Austin reports that the appraisers agreed true damages to Herrera’s vehicle were nearly $4,600 more than what her insurer wanted to pay.
The Auto Body Association of Texas (ABAT) has been lobbying lawmakers for years to make the appraisal clause mandatory because of situations like Herrera’s occurring time and time again. Although back-and-forth negotiations between customers and/or repair centers and insurance carriers don’t just happen in the Lone Star State — it’s a nationwide issue that often comes up in collision repair industry discussions.
The latest version overwhelmingly passed in the House. Its Senate companion was recommended for passage by the Business & Commerce Committee during this year’s legislative session but it didn’t make it to the floor for a vote. It would’ve required insurers and policyholders to invoke the appraisal clause within 90 days of the proof of loss. Both parties would’ve been required to appoint “competent appraisers.”
The passage of the bill in the House followed recommendations in January from the Texas Office of Public Insurance Council (OPIC) that the right to appraisal on insurance claims be made a mandatory part of policies.
An ABAT member told CBS Austin the association plans to continue to push for the mandate during Texas’ next legislative session in 2025.
Featured image: Stock photo of vehicle involved in collision. (Credit: Daisy-Daisy/iStock)