Navigating Diminished Value Claims and Invoking the Appraisal Clause in North Carolina

After an auto accident, many vehicle owners may not realize they can pursue a diminished value claim for their damaged vehicle. Diminished value is the reduction in a car’s market value that occurs even after repairs restore its appearance and functionality. Understanding how to handle these claims, particularly through the appraisal clause, is crucial for obtaining fair compensation. Here’s a comprehensive guide to invoking the appraisal clause in North Carolina for your diminished value claim. To read more about general facts regarding diminished value please feel free to read our Diminished Value article.

What is Diminished Value?

Diminished value refers to the loss in market value of your vehicle after it has been involved in an accident and subsequently repaired. Despite repairs, the vehicle may still be worth less due to its accident history. The diminished value is the difference between the vehicle’s fair market value immediately before the accident and its value after repairs.

The Appraisal Clause: An Overview

In North Carolina, the appraisal clause provides a structured process for resolving disputes over the diminished value of your vehicle. Under North Carolina General Statutes § 20-279.21(d1), this clause allows for the resolution of diminished value claims with minimal involvement from you, relying on third-party appraisers to determine the fair value.

When to Invoke the Appraisal Clause

You can invoke the appraisal clause in the following scenarios:

1. Disputed Amount Exceeds $2,000: If the claimed diminished value is more than $2,000.
2. Percentage of Fair Market Value: If the diminished value is greater than 25% of the vehicle’s pre-accident fair market retail value, as determined by the National Automobile Dealers Association (NADA) pricing guidebook.

Steps to Invoke the Appraisal Clause

1. Send Written Notification: To invoke the appraisal clause, you must send a written notice to the insurance adjuster handling your claim. This letter should state your intent to invoke the appraisal clause under NC Gen. Stat. § 20-279.21(d1), include your claim number, and specify whether your claim meets the $2,000 threshold or the 25% value criteria. NOTICE MUST be provided within 30 days from return of your vehicle after repairs. Failure to provide proper notice could prevent you from being able to move forward with your claim.
2. Select an Appraiser: Within 20 days of invoking the clause, provide the insurance company with the contact information of your chosen appraiser. Including this information in your initial letter can expedite the process.

How the Appraisal Process Works

1. Appraiser Selection: Both you and the insurance company will select a certified, disinterested appraiser. Each appraiser will evaluate the vehicle’s diminished value and prepare a report.
2. Resolution: If the appraisers agree on a value, that amount can become binding. You have 15 days to dispute the agreement between the two appraisers. Failure to do so makes the decision binding. If they cannot agree, they will select an independent umpire to make a final determination.

The Umpire Process

If the appraisers cannot reach an agreement, an umpire is appointed to resolve the dispute. Here’s how the umpire process works:

1. Selecting an Umpire: The appraisers will jointly select an umpire who is a neutral third party with expertise in vehicle valuation. If the appraisers cannot agree on an umpire within 15 days, either party can request that a magistrate, residing in the county where the vehicle is registered or where the accident occurred, appoint the umpire.
2. Umpire’s Role: The umpire reviews the reports and findings of both appraisers. The umpire is responsible for making a final determination of the diminished value. The umpire’s valuation must fall within the range provided by the appraisers. For instance, if one appraiser values the diminished value at $4,000 and the other at $3,000, the umpire’s decision will be within this range, but not higher than $4,000 or lower than $3,000. The umpire can agree to an appraisal 100%. In other words, in the above example, the umpire could find a ruling of $4,000.00 or $3,000.00.
3. Final Decision: The umpire’s decision can become binding. The appraisal report or the umpire’s valuation will be presented to both you and the insurance company. You have 15 days to accept or reject the report. Failure to reject the decision within this timeframe will result in the amount being considered binding and enforceable.

Cost of the Appraisal

You are responsible for the cost of your own appraiser, while the insurance company covers their appraiser. If an umpire is needed, the cost is shared equally between both parties.

Why Choose RHD Legal?

Navigating diminished value claims and the appraisal process can be complex and time-consuming. At RHD Legal, our attorneys have a tremendous amount of experience handling such claims and can guide you through every step of the appraisal process, including managing the umpire process. We provide much needed legal advice, negotiate with insurance companies, and ensure that you receive fair compensation.

If you’re considering invoking the appraisal clause or need assistance with a diminished value claim, contact RHD Legal today. Our team is dedicated to providing you with comprehensive support and representation to secure the compensation you deserve. With the strict deadlines faced when dealing with diminished value claims in North Carolina, you cant afford to wait – call us today (919) 246-4001.