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Invoking the Appraisal Clause

Invoking the Appraisal Clause for Your Diminished Value Claim

If you have been involved in an accident, you may have a diminished value claim for your vehicle, so long as you were not the at-fault driver. Diminished value claims are often neglected, as most individuals are not aware of their right to make a diminished value claim.

Essentially, diminished value claims provide you with an avenue to seek reimbursement for the lost fair market value of your vehicle after it has been involved in an accident. Simply put, diminished value is the difference between the fair market value just before the accident and the fair market value after repairs. For more information as it pertains to diminished value, please read Claiming Diminished Value.

There are two key ways to try to resolve your diminished value claim with an at-fault driver’s insurance company before you would file your claim in court: 1) negotiating with the adjuster or 2) invoking the North Carolina appraisal clause. This article will focus on the latter action, invoking the appraisal clause.

What is the North Carolina Appraisal Clause?

In North Carolina, whenever the damages to your vehicle are greater than 25 percent of the fair market value, then the notation must be made on your title or in writing when that vehicle is sold. With this being said, the North Carolina legislature established a statute that provides an individual with an avenue to seek compensation for their diminished value claim. See NC. Gen. Stat. § 20-279.21 (d1). Essentially, NC. Gen. Stat. § 20-279.21 (d1), known as the appraisal clause, provides you with a means to have your diminished value claim resolved with very little involvement on your part.

By invoking the clause, you place the diminished value claim in the hands of third-party appraisers. This can be beneficial because neither you nor the insurance company is involved in the negotiating process.

The certified appraisers do all the legwork. Once you invoke the clause, two appraisers, one of your choosing and one of the insurance company’s choosing, will attempt to come to an agreement as to the value of the diminished value claim. Therefore, you will have very little involvement in the process other than hiring an appraiser of your choosing.

When Can I Invoke the Clause?

Pursuant to NC, Gen. Stat. § 20-279.21 (d1), you can invoke the clause under two different circumstances:

  1. If the disputed amount of diminished value between you and the at-fault party’s insurance is greater than $2,000.


  1. If the disputed amount of the diminished value is greater than twenty-five percent (25%) of the fair market retail value of the vehicle prior to the accident (based off of NADA – National Automobile Dealers Association pricing guidebook).

How Do I Invoke the Clause?

Once you have determined that your diminished value claim relates to one of the two circumstances above, you may invoke the appraisal clause. The clause must be invoked in writing. This can be done by mailing a letter to the adjuster assigned to your claim, stating that you wish to invoke the appraisal clause in accordance with NC. Gen. Stat. § 20-279.21 (d1). Also, be sure to include your claim number and list which circumstance your situation falls under regarding the disputed amount of diminished value.

Important Note: Pursuant to the statute, you must provide the insurance company with the contact information of the appraiser you choose within 20 days of the clause being invoked. With this being said, it is a good idea to include this information within the letter used to invoke the appraisal clause.

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