A bill recently introduced in the New Jersey Senate would require every automobile insurer to provide consumers with an appraisal clause in their policy.

Sen. Paul Moriarty (D-4) introduced SB4534 last week. It has been referred to the Senate Commerce Committee. 

The bill requires insurance policies to have a provision allowing for an appraisal by a “competent and disinterested appraiser.” 

An appraiser can be used if the policyholder and insurer disagree on actual cash value or the amount of loss, including the repairable and total loss amount of an automobile reported on a claim, or the offer of settlement to a third-party liability claim. 

Either party may submit a written demand letter to the other invoking the appraisal provision. The other party must notify the initiating party within 20 calendar days after receiving the letter. 

If the appraisers fail to agree on the actual cash value and amount of loss, or an offer of settlement, the documents completed by both appraisers should be submitted to an umpire. If the parties disagree on an umpire, a judge in a court of competent jurisdiction would decide.

Ken Miller, Alliance for Automotive Service Providers New Jersey (AASP-NJ) president, said this is the first time a right-to-appraisal bill has been introduced in the state. 

“This is extremely important because of the current behavior of insurers,” Miller said. “It can’t not be anymore. This has to be an option for the insured drivers of New Jersey to be treated fairly.” 

The bill does not include a requirement for the insurance company to pay the appraisal costs if the final decision differs from their original estimate. This has been in bills introduced in other states. 

“The senator was not interested in complicating the bill too much,” Miller said. “We’ve seen Texas and other states fight and fight.” 

After more than six years of advocating, a bill to make it mandatory that auto insurance policies include an appraisal clause is on its way to Texas Gov. Greg Abbott.

Washington’s governor signed a right-to-appraisal bill into law late last month after six years of advocating there. The bill was amended to strike language that would’ve required insurance companies to reimburse policyholders for the appraisal process if the loss determined through the process is $500 or more than what the insurance company adjusted. Advocates for the bill expressed concerns it would not have passed without the amendment. 

Miller said the bill is early in the process, but AASP-NJ is optimistic. He said the next step will be to educate and rally members of the association about the bill.

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Photo of New Jersey State House courtesy of DenisTangneyJr/iStock