The two most important qualifications an appraiser brings to an appraisal clause is disinterest and credentials.
Percentages are how contingency lawyers get paid not appraisers!
Our valuation is a flat fee. Settlement work is hourly. Our hourly rate is $300. We dont expect a blank check, so we will cap our hourly fee at 25% of the recovery. Want to pay us hourly, sure, but we cannot predict how long it takes....
Free opinion of value before you hire us. No upfront fees.
A contingency fee is a percentage of the outcome. No recovery, no fee. Bigger recovery, bigger fee, with no upper bound except the recovery itself. What the professional gets paid rides entirely on the number they produce.
In contrast, an hourly arrangement payment is whatever the clock says. Time went in, so time gets billed. The recovery is irrelevant, but is that fair?
A percentage cap on an hourly fee works the other way around. You put the appraiser to work with the knownledge that his invoice will never exceed your payout.
Standard appraisal clause language, mirrored in state statute, requires that each side select a competent and disinterested appraiser. Massachusetts codifies this in M.G.L. c. 175, §191A. Under that section, if the insured and the company cannot agree on the amount of loss, each side selects a competent and disinterested appraiser on written demand made within sixty days of the company receiving proof of loss, the appraisers then select a competent and disinterested umpire, and each party pays its own chosen appraiser while the remaining costs are split.
Carriers use that language. In one Massachusetts appeals case, a carrier objected to the policyholder's named appraiser specifically on the ground that he was not disinterested under §191A, and the carrier's position was backed by a written opinion from legal counsel to the Division of Insurance. A disinterest objection can knock your appraiser out of the process and stall your claim.
Interested here means the appraiser's stated opinion of value can move the appraiser's own compensation. If writing a higher appraised amount pays the appraiser more, the appraisal is just an invoice.
Most fee confusion starts with treating an appraisal engagement as one service. It is three separate pieces of work, and they cannot share a pricing model.
Research, comparable selection, condition adjustment, and a written report. The scope is defined and the workload is knowable, so it gets a flat fee, quoted before you pay anything.
If the carrier comes back with questions, wants more comparables, or challenges an adjustment, answering is part of standing behind the report you bought. We do not charge extra to defend our own work.
Rounds with the opposing appraiser, qualifying and selecting an umpire, and issuing settlement award documents. There is no way to know how long it runs, so it is billed hourly.
Piece three resists a flat fee, and this is where the pricing usually breaks. A flat settlement fee only works if you know how much work is coming, and nobody knows that on day one. Some claims settle in two calls. Some run weeks across a dozen exchanges with a carrier appraiser paid to slow walk it. Set the flat fee low enough to look attractive and you lose money on the hard files, so you stop fighting them. Set it high enough to cover the hard files and every client whose claim settled in an afternoon has overpaid.
So settlement is hourly, for the same reason other professionals bill hourly when the workload is unknown. An appraiser who spends thirty hours wearing down a carrier appraiser has earned more than one who sent a single email and got paid. Any structure that ignores the difference is either shorting the appraiser or overcharging the client.
You get an opinion of value before you pay us anything. The quote comes first. The report is a flat fee. That number holds whether you pay us more later or never pay us again.
The best outcome for a client, and for us, is the adjuster paying the appraised value outright. Then we do no further work, bill nothing further, and go away. We do not make more money when the fight drags on, and we do not make more money when the number climbs.
If you want to pay hourly, we will gladly accept. However, clients tie and again rejected hourly billing when the outcome is unknown. That is why we limit how much we make so it makes sense. The percentage is merely a way to establish the cap.
The relationship from the beginning is based on a percentage, the appraisal is variable, the appraiser's pay is directly related to the recovery.
NOT WHAT YOU WANT!!!
A cap forgives part of a fee already earned on the clock. It subtracts, and it only moves in that direction.
No recovery figure is large enough to make you owe more than hours times rate. The hourly total is the ceiling and the percentage only cuts below it. You are billed HOURLY but the total amount cannot exceed what is reasonable.
Some clients are fine with hourly. The work takes what it takes, they want the appraiser paid for every hour spent pushing the carrier, and they do not want a percentage anywhere near the file. If that is you, say so. We will bill straight hourly, no cap of any kind, no percentage in the agreement, and we will not argue with you about it.
Most clients want a number first. They will not walk into an appraisal clause without knowing the worst case, which is fair. If that is you, ask for the cap.
Whatever the clock says, you never pay us more than 25% of the increase we obtain for you. If the hours come to more than that, we absorb the difference. If the recovery is large enough that 25% runs past the hours, you pay the hours instead.
Add an hour cap on top and you get a second ceiling. Hour cap times rate is the most you can owe under any outcome, in writing before we start. Whichever ceiling is lower governs.
Ask the same of any appraiser you are considering. Straight hourly or a stated cap, in writing, before you pay anything. If they will commit to neither, you have no idea what you are agreeing to.
Plenty of clients will not enter an appraisal clause with an open ended clock, and that is a fair objection. So we agree an hour cap before the settlement phase starts. That is the most we are allowed to bill, which turns the worst case into a number you know before you say yes.
Hour cap times rate is the hard ceiling. The 25% cap sits underneath and can only pull the bill lower. Take a $300 rate, a 10 hour cap, and our 25% cap on the increase obtained, and the ceiling lands at $3,000. Move the sliders to see which number governs.
Ours is 25%. Whatever the clock says, you never owe more than this share of what we recover.
The most we are allowed to bill, agreed in writing before we start.
| Scenario | Increase obtained | 25% of the increase | 10 hour cap on the clock | You owe | Effective rate |
|---|---|---|---|---|---|
| Small recovery | $2,000 | $500 | $3,000 | $500 We absorb $2,500 of our own time |
$50 per hour |
| Large recovery | $40,000 | $10,000 | $3,000 | $3,000 The percentage never applies upward |
$300 per hour |
The second row is where the argument ends. A real contingency bills the client $10,000. Capped hourly bills $3,000. A contingency would turn that large recovery into a windfall for us, and this one cannot, because the clock governs and the percentage can only discount.
Take the cap out and look at what uncapped hourly does to a client on a weak claim.
Five hours of negotiation on a claim that improves by $500 produces a $1,500 bill against a $500 gain. The client is $1,000 worse off for having pursued it.
That is legal, defensible, and fair under a straight hourly agreement. The client would still be furious, and they would be right.
The 25% still feels like a contingency...
It's not, here's why:
We offer a free claim review on every case, we tell you in advance what we think your car is worth (or lost in value) and will put that in a report for a flat fee. You can settle your own claim and owe us nothing beyond the appraisal cost.
Settlement services ARE NOT included in the appraisal flat fee because settlement involves an unknown amount of additional work and an unknown number of billable hours. It is only fair or us to get paid for additional work.
The 25% cap is there for the client, and a client can turn it down. Tell us you would rather pay for every hour worked with no percentage in the agreement and that is what you get. Simple.
Whether you hire us or someone else, these five questions will tell you everything about how an appraiser gets paid.
Do I get your opinion of value before I pay you, or after?
Ours: before, we offer free claim reviews on every case.
Does the amount I owe you change if your opinion of value changes?
Ours: no; our apprsised values are set in a report.
Is the fee for the valuation separate from the fee for negotiating a settlement?
Ours: yes. Settlements takemore time, hence more cost.
What is the absolute maximum I can owe, and what sets that number, the clock or the recovery?
Ours: the clock, capped at 25% of the recovery, but you can pay straight time if the 25% cap feels like a contingency (which it isnt)...
I there an agreement I need to sign before you negotiate my claim?
Ours: yes. We need your written permission to settle your claim, our retainer will outline our deliverables and the associated costs.
Not sure if there's enough money in your case? We offer a free claim review!
A contingency fee turns the appraiser's opinion into a variable. That is why it gets appraisers disqualified under an appraisal clause and why no serious firm prices a valuation that way.
Settlement work is different. Nobody knows the hours before the fight starts; Hourly rates are industry standard.
A percentage cap guarantees that a small recovery cannot produce a large bill. It can only help the client.
Still not convinced? If you would rather pay for every hour worked, say so and we will bill it that way.