Insurance Companies Are Quietly Removing the Appraisal Clause—Here's What Body Shops Need to Know

A critical consumer protection is disappearing from auto insurance policies across the country. The appraisal clause—which gives policyholders the right to dispute claim amounts through a neutral third-party process—is being quietly removed by some of the nation's largest insurers. For body shop owners, this trend threatens to eliminate one of the most effective tools for ensuring customers receive fair compensation for proper repairs.

What Is the Appraisal Clause?

The appraisal clause is a provision in auto insurance policies that provides a mechanism for resolving disputes about the "amount of loss." When a policyholder and insurer cannot agree on how much it costs to repair a vehicle, either party can invoke the appraisal clause to have the dispute resolved by neutral appraisers.

The process typically works as follows:

1. Each party selects a "competent and impartial" appraiser
2. The two appraisers attempt to agree on the amount of loss
3. If they cannot agree, they select an umpire
4. A decision by any two of the three is binding

Which Insurers Are Removing the Clause?

Why Are Insurers Removing It?

The answer is simple: money. The appraisal process often results in higher claim payments than insurers' initial offers. By removing the clause, insurers eliminate a mechanism that frequently works against their financial interests.

"The appraisal clause levels the playing field between consumers and insurance companies. Without it, policyholders have limited options when insurers lowball their claims."

States Fighting Back

Some states have recognized the importance of the appraisal clause and have taken action to protect consumers:

• Texas (SB 458): Effective September 2025, requires appraisal clauses in all auto policies
• Washington (SB 5721): Mandates appraisal rights for policyholders
• Rhode Island (SB 925): Requires appraisal clause provisions
• Alaska, Massachusetts, Virginia: Long-standing appraisal requirements

Impact on Body Shops

For body shop owners, the removal of appraisal clauses creates significant challenges:

• Fewer dispute resolution options: Without appraisal, the only recourse may be litigation
• Increased customer out-of-pocket costs: Customers may have to pay the difference or accept substandard repairs
• Pressure to accept inadequate payments: Shops may feel forced to accept insurer estimates
• Damaged customer relationships: Customers may blame shops for insurance shortfalls

What Body Shops Should Do

1. Check customer policies: Before assuming appraisal is available, verify the customer's policy includes the clause
2. Educate customers: Help customers understand the importance of appraisal rights when shopping for insurance
3. Support legislative efforts: Advocate for mandatory appraisal clause laws in your state
4. Document everything: Thorough documentation is essential for any dispute resolution method
5. Partner with professionals: Work with appraisal professionals who can help when the clause is available