Insurance policies often include appraisal provisions that can not only vary from state to state but policy to policy. In this first snap shot I’ll focus on appraisal provisions found in some Texas policies and how the Texas courts have interpreted them.
The purpose of an appraisal provision is to afford a simple, speedy, inexpensive, and fair method of determining the loss or damage resulting from the happening of a contingency insured against.1 A clause in an insurance policy under which the parties agree that the amount of loss shall be fixed by appraisers appointed by the parties is both lawful and enforceable,2 and an appraisal award made pursuant to the provisions of an insurance contract is generally binding and enforceable.3 An appraisal decision is intended to estop one party from contesting the issue of the value of damages in a suit on the insurance contract,4 leaving only the question of liability for the court.5
Property insurer and insured’s dispute over roof damage from hail fell within scope of appraisal, to determine "amount of loss," under appraisal provision in standard-form policy, to extent parties’ disagreed which shingles needed replacing. State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009).
Dispute, before any coverage action was filed, over extent of hail damage to insured’s roof, whether only ridgeline was damaged or entire roof needed to be replaced, related to amount of loss, within meaning of appraisal provision of homeowners policy, so that insured could demand appraisal on that question, even if appraisers’ inquiry would include some causation element. State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009).
An appraisal clause, in property insurance policy, binds the parties to have the extent or amount of the loss determined in a particular way, and like any other contractual provision, should be enforced. State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009).
Award after appraisal process pursuant to terms of commercial insurance policy, determining amount of loss that insured had incurred due to its hotel being damaged in hurricane, did not by itself entitle insured to a judgment against insurer for amount of award, without any summary judgment proceeding, trial, or agreed judgment, since appraisal process determined only amount of loss, and did not determine other issues including insurer’s liability under policy. Security Nat. Ins. Co. v. Waloon Inv., Inc., 384 S.W.3d 901 (Tex. App. Houston 14th Dist. 2012).
Where an insurance contract mandates appraisal to resolve the parties’ dispute regarding the value of a loss, and the appraisal provision has not been waived, a trial court abuses its discretion and misapplies the law by refusing to enforce the appraisal provision. In re Slavonic Mut. Fire Ins. Ass’n, 308 S.W.3d 556 (Tex. App. Houston 14th Dist. 2010).
Parties may be compelled to appraisal where they fail to agree on the amount of loss of a covered claim. Johnson v. State Farm Lloyds, 204 S.W.3d 897 (Tex. App. Dallas 2006).
Dispute over extent of damage to roof from hail concerned "amount of loss" within the meaning of homeowners policy provision entitling either party to demand appraisal on amount of loss, where the insured and insurer agreed that there was coverage. Johnson v. State Farm Lloyds, 204 S.W.3d 897 (Tex. App. Dallas 2006).
1 Fire Ass’n of Philadelphia v. Ballard, 112 S.W.2d 532 (Tex. Civ. App.—Waco 1938).
2 Ballard, 112 S.W.2d 532; Boston Ins. Co. v. Kirby, 281 S.W. 275 (Tex. Civ. App.—Eastland 1926).
3 Breshears v. State Farm Lloyds, 155 S.W.3d 340 (Tex. App.—Corpus Christi 2004), review denied, (Dec. 3, 2004); General Star Indem. Co. v. Spring Creek Village Apartments Phase V, Inc., 152 S.W.3d 733 (Tex. App.—Houston 14th Dist. 2004); Allison v. Fire Ins. Exchange, 98 S.W.3d 227 (Tex. App.—Austin 2002); Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (Tex. App.—Fort Worth 1992), writ dismissed by agreement, (June 3, 1993).
4 Breshears, 155 S.W.3d 340; Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (Tex. App.—Houston 14th Dist. 2004); Allison, 98 S.W.3d 227.
5 Franco, 154 S.W.3d 777.