A provision within a motor vehicle coverage policy offers an alternative dispute resolution method when disagreements arise regarding the value of a loss. It allows both the insurer and the insured to each select a competent appraiser. These appraisers then independently assess the damage and determine its monetary worth. Should they disagree, they select an impartial umpire whose decision is binding.
This mechanism provides a quicker and often less expensive means of settling valuation disputes compared to litigation. It ensures a fair process by involving independent experts and a neutral third party, leading to resolutions that often satisfy both parties. Historically, such clauses have become more prevalent as a way to streamline the claim settlement process and reduce court backlogs associated with motor vehicle damage assessments.
