NJ Bill Pushes Mandatory Appraisal Rights in Auto Insurance Policies

New Jersey Assembly Bill 6106 proposes a requirement for all auto insurers in the state to include appraisal provisions in their policies. This legislation aims to provide policyholders and insurers a formal mechanism to dispute claim settlements over repair costs through an independent appraisal process. The bill, introduced in November 2024 by Assembly members Dan Hutchison and Cody D. Miller, parallels Senate Bill 4534 introduced earlier in May 2024, with both bills seeking to mandate these appraisal rights in auto policies. These measures would address a growing trend where insurers have been removing or limiting appraisal clauses, which traditionally allowed for fair dispute resolution on actual cash value and loss amounts. The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) supports the legislation, highlighting its role in consumer protection, especially for drivers who receive disputed claim settlements. The inclusion of both bills reflects an effort to advance this consumer rights reform through respective legislative committees simultaneously. Significantly, the proposed law would extend appraisal rights to third-party claimants, a feature uncommon in other states. Currently, non-fault drivers typically lack formal appraisal recourse against at-fault parties' liability insurers when settlement offers are insufficient. Enabling third-party appraisals would empower these drivers to challenge lowball settlements, thereby supporting collision repair shops in ensuring adequate compensation for repairs. The appraisal process outlined involves each party appointing a "competent and disinterested appraiser" within 20 days, followed by a resolution timeline for determining actual cash value within 20 business days. Disagreements between appraisers would be resolved by a binding decision from a jointly selected or court-appointed umpire. If passed, the bill would become effective 90 days post-enactment and apply to claims filed afterward. This move places New Jersey alongside states like Texas, Washington, Rhode Island, Alaska, and Massachusetts, which have enacted similar mandatory appraisal provisions to protect consumer and repair shop interests. The AASP/NJ encourages local collision repair business owners to actively participate in advocacy efforts, emphasizing the importance of industry stakeholder engagement to advance the bill through legislative committees and towards a potential vote. The legislation reflects broader regulatory trends aiming to restore appraisal rights amid insurer practices that complicate claim settlements, thereby influencing market fairness and consumer protection. It also underscores the intersection of legislative action and industry-driven advocacy to shape state-level auto insurance policy frameworks and compliance standards.