One of the more misunderstood issues when hearing damages disputes is appearance allowances. First, what is an appearance allowance? An appraiser may offer an appearance allowance (compensation) for minor cosmetic damages that may not be clearly visible, but could be expensive to repair.
This can become confusing for an arbitrator when the Filing Party applies both a deductible and an appearance allowance on the same estimate. In this example, the gross damages without the appearance allowance total $3,656.57. There is a $500.00 deductible, which is reduced to $300.00 due to the application of the $200.00 appearance allowance. The estimate supports net damages totaling $3,356.57 ($3,556.57 - $500.00 + $200.00) as shown in the example below.
When seeking damages for this arbitration, the Filing Party is seeking auto damages totaling $3,856.57. This amount includes the $3,656.57 Total Cost of Repairs (including the $500.00 deductible), plus the $200.00 appearance allowance. The Recovering Party is allowed to seek the recovery of their appearance allowance in the Auto forum, since the appearance allowance is for damages that were incurred by the Recovering Party. Remember, the appearance allowance is not a deductible credit; it is to compensate the insured for loss-related damages that were not repaired.
Below, you will see the damage decision entry page. Here, the filing company is seeking auto damages, which include the appearance allowance less the deductible ($3,656.57 + $200.00 - $500.00 = $3,356.57).
After your review of the damage arguments, rebuttals, and evidence, you will determine if the Recovering Party has proven the disputed appearance allowance. For this filing, after the arbitrator’s review, the arbitrator concluded the Recovering Party’s estimate supported the appearance allowance, as noted below.
Once the decision entry is complete, the arbitrator will click the “Done” button. The arbitrator confirmed the $500.00 deductible was supported and clicked the “Accept” button. For the award summary, you see that the auto damages, which included the appearance allowance and the deductible, have been awarded in the amount of $3,856.57.
The key point to remember is while the estimating system will apply the appearance allowance to the deductible, it is not a deductible credit. The appearance allowance is for the reimbursement of cosmetic damages that were not repaired. The appearance allowance is not included in the net repair costs or the deductible, and if proven, is owed in addition to the net auto damages and deductible.