In my August 30, 2012, post “When can Policyholders Demand Appraisal,” I wrote about Florida appraisal law. In Florida, if a carrier recognizes any coverage for a particular loss, the policyholder has the right to demand appraisal. Carriers can only avoid appraisal if policyholders fail to comply with a condition precedent in their policy’s Duties After Loss provision. I also noted that Michigan’s laws are even more favorable to policyholders because the right to proceed to appraisal is absolute.
Recently, Chip Merlin and I asked the U.S. District Court for the Western District of Missouri to grant our client’s motion to compel appraisal. As published in Strafford’s October 1, 2012, Insurance Law & Litigation Week:
The U.S. District Court for the Western District of Missouri granted an insured’s motion to compel appraisal of a claim against its property insurer for losses arising out of wind and hail damage to the insured properties. The insurer acknowledged that some of the property damage was due to those causes; therefore, appraisal was appropriate because the central issue was a dispute over the amount of loss, not whether the loss was covered under the policy.
Our client, Tarantino Properties Inc., owned rental properties in Independence, Missouri, that were insured by Underwriters at Lloyd’s of London. The policy provided coverage for physical loss resulting from hail and wind damage and also contained an appraisal provision that allowed either the carrier or the insured to demand appraisal if a dispute over the amount of loss existed.
Tarantino suffered hail damages from a September 18, 2010, storm and again suffered damages from a severe storm on December 11, 2010. Lloyd’s engineer inspected the loss sites and concluded that most of the damages were a result from long term wear and tear and deterioration. Lloyd’s then estimated the damages to be approximately $278,000 and issued payment based on its estimate minus the $50,000 deductible.
Tarantino then retained its own engineer, who determined that the wind and hail damages totaled nearly $3,000,000. Lloyd’s sued Tarantino seeking a declaration that the remainder of Tarantino’s claimed damages were excluded under the policy. Tarantino filed a counterclaim requesting the court to compel appraisal.
Because Lloyd’s recognized coverage for the loss, the court found the central issue to be a dispute over the amount of the loss, not over coverage. The court issued an order compelling the parties to participate in the appraisal process.
This is a big win for policyholders in Missouri. As noted by the court in its order,1 this was an issue of first impression in Missouri and we were fortunate the court followed the reasoning of the Florida Supreme Court in State Farm Fire & Cas. Co. v. Licea, 685 So.2d 1285 (Fla. 1996).