Illinois Proposes Right-to-Appraisal Clause for Auto Insurance Policies

Two bills have been introduced in the Illinois House and Senate to require all auto insurance policies in the state to include a right-to-appraisal clause.

The legislation aims to establish a formal process for resolving disputes between policyholders and insurers over loss valuations or settlement offers, with specific timelines and procedures for appointing appraisers and an umpire if necessary. Each party is responsible for their chosen appraiser's costs, while the umpire's fees are shared, with provisions for insurers to cover all fees if the final appraisal award significantly favors the policyholder.

Penalties for insurers who fail to comply with these requirements include civil fines and potential revocation of the authority to sell auto insurance in Illinois. The bills reflect ongoing efforts to enhance consumer protections in auto insurance claims, driven in part by concerns over delayed appraisals and disputes leading to out-of-pocket expenses for insureds.

Illinois continues to explore broader insurance reform, including rate-setting legislation and restrictions on the use of socioeconomic data for pricing, with major insurers headquartered in the state under scrutiny. This development aligns with recent right-to-appraisal laws enacted in other states like Washington and Texas, indicating a national trend towards more structured dispute resolution in insurance claims.