A Washington bill would require vehicle insurance policies to include a provision that gives policyholders the right to an appraisal to resolve disputes about the actual cash value and amount of loss on a damaged vehicle. 

HB1645 was introduced Jan. 28 and referred to the Consumer Protection and Business Committee. A similar bill, SB6252, was filed in the Senate last year but never made it out of the Senate’s Committee on Business, Financial Services, Gaming and Trade. 

Jeff Butler, a public and independent adjuster who owns Collision Consulting of Washington, has been advocating for a right-to-appraisal law in the state in recent years. 

Last year’s bill came following a letter and petition Butler sent to legislators asking for auto insurance reform to protect businesses and the public against “unfair and deceptive practices” he says insurers are using through photo estimating, artificial intelligence (AI), and virtual claim processes.

Butler said he continued the conversation about right-to-appraisal legislation with the Washington Office of the Insurance Commissioner (OIC), and the result is a consumer protection bill that the OIC supports.

Once the appraisal clause is invoked, each party has 10 days to select a disinterest appraiser. The appraisers must appoint a “competent and disinterested” umpire, the bill says. If this does not happen, either appraiser may notify the commissioner and the commissioner shall identify a registered competent and disinterested umpire. The bill defines disinterested as someone with no direct financial interest in the outcome. 

If the appraisers aren’t able to agree on the loss, they must submit their differences to the umpire, the bill says. 

Each party is responsible for their appraisal expenses and equally responsible for the cost of the umpire, the bill says. 

If the amount of loss determined through the appraisal process is greater than the amount of loss the insurance company adjusted before the appraisal process was invoked by $500 or more, the insurance company would reimburse the policyholder for the costs incurred for the process, the bill says. 

The appraisal process costs include reasonable appraiser professional charges, reasonable attorney’s fees, and other necessary costs. 

Following the filing of the bill, Butler sent another letter to legislators explaining his support for the bill. 

“While consumers are entitled to fair compensation, the existing legal infrastructure in Washington fails to provide effective remedies for policyholders when the insurer offers insufficient settlement amounts — especially in claims ranging from $3,000 to $10,000,” Butler wrote.  

He notes that an analysis completed by his company shows the average difference between an insurance company’s initial estimate versus the appraisal award is $11,533. His company also found the average difference between an insurance company’s offer for total loss versus the appraisal award to be $5,775. 

Butler added that the cost to invoke the appraisal clause can range between $550 and $4,000 for policyholders. 

“Consumers who are already struggling to recover the full value of their claim are left with yet another financial burden,” Butler said. “The additional costs from a short payment of their claim and the costs of the appraisal process effectively function as a ‘second and third deductible,’ further diminishing the policyholder’s recovery.” 

In the letter Butler sent legislators last year, he outlined a case with Safeco/Liberty Mutual in which a counter estimate was given that was thousands of dollars lower than the estimate his shop, Haury’s Collision & Vintage, provided.

In July, the OIC fined Allstate $25,000 for providing an estimate that was more than $20,000 short of the cost to repair a vehicle. 

Washington Independent Collision Repairers Association (WICRA) presented a survey of members about the impact of photo estimating on their businesses to the OIC in July 2023 during a workshop. 

On average, the 30 independent shops said they see more than 1,000 photo estimates at their businesses each month. About 93% of auto claims were settled solely on the insurer’s review of photos.

Eighty percent of the shops said none of the photo estimates they reviewed were accurate.

Seventy percent of shops said they had to resubmit information to the insurer multiple times before receiving a response or payment.

During the workshop, former Insurance Commissioner Mike Kreidler commented, “I believe we have some serious issues right now. We’ve seen a 63% jump in complaints about claims issues, on average… I know supply chain issues have caused some repair delays but I’m especially concerned with the increase in consumers with complaints about the claims experience that do not involve supply chain problems… Some of the most concerning issues we’re hearing involve the issue of the use of photo that can produce very little repair estimates. Actual human adjusters are not inspecting the damage and insurers are not thoroughly explaining why they disagree with a consumer’s repair estimates.”

The OIC also previously reported a historic volume of complaints since 2021 according to its historic trends report released in July 2023.

Butler said Monday it has taken years of advocacy to prove to the OIC the issues consumers face in the state. 

Yet, Butler said he expects the bill will continue to face pushback from insurance lobbyists as it moves through the legislative process. 

The House Consumer Protection and Business Committee, where the bill now sits, has a history of siding with insurance lobbyists, Butler said. 

Oftentimes, insurance lobbyists say that bills, such as HR1645, will raise premium rates, Butler said. He added if that were the case, it would serve as evidence that insurance companies are short-paying consumers.

Oregon, a bordering state, has its own right to appraisal law that requires the clause in insurance policies and hasn’t seen significant premium increases, Butler said.

Property and casualty (P&C) insurance companies have outspent health and life insurance peers in lobbying the U.S. government over the past 10 years, according to an S&P Global article. 

In 2023, P&C insurers spent approximately $57.2 million on lobbying, while health insurance spent about $49.2 million and life insurance about $31.1 million, the article says. 

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Photo courtesy of Elena Mishina/iStock