On May 12, 2025, the Illinois Appellate Court for the Second District of Illinois held, for the first time, that “[r]esolving some questions of causation will be necessarily included in the appraisal process” in affirming the trial court’s grant of Plaintiff’s motion for judgment on the pleadings to compel State Farm to appraisal. 1 This decision is likely to change the landscape of insurers contesting appraisal as a “coverage” dispute in Illinois moving forward.
The insured property was damaged as a result of a hail and wind event for which the insured submitted a claim to State Farm. State Farm agreed there was damage to gutters, downspouts, and aluminum wraps on certain window frames and trim and made payment to the insured. The insured disagreed with the assessment and believed that the damage was extensive enough to require the replacement of windows on the dwelling and invoked appraisal. State Farm refused the demand for appraisal, stating that it viewed the differences in estimates to be a dispute over “coverage” and not the amount of loss.
I was retained by the insured to represent her in an effort to compel State Farm to appraisal. The trial court granted our motion for judgment on the pleadings and compelled the dispute to appraisal. State Farm appealed.
The Illinois Appellate Court for the Second District of Illinois likened State Farm’s argument to building a house on a “foundation of sand.” 2
In the immediate matter, however, there can be little doubt that the windows of the home are ‘covered’ under the homeowners policy. There is a dispute as to whether or not said windows were damaged by the storm, but that is not the same as a dispute as to whether the windows were covered by the policy at all.
The Appellate Court went on to state that since the Defendant had already admitted the hailstorm caused damage to the trim of the windows on the home and paid for that damage, “[i]t stretches credulity for [State Farm] to now assert that there is a question regarding whether the windows are ‘covered’ by the policy. There may be a dispute as to whether the windows were damaged by the hailstorm, but that is not an issue of coverage. It is an issue of loss. And appraisal is ideally suited to resolve disputes over loss.” 3
In reaching its decision, the Second District Court of Appeals not only looked at the persuasive decisions of Illinois federal district courts and an unpublished Illinois appellate court case from the Fifth District, Shelter Mutual Insurance Company v. Morrow, 4 but also looked to other foreign jurisdictions such as Iowa, Minnesota, Florida, Delaware, and Rhode Island, to name a few. Ultimately, the Illinois Appellate Court for the Second District found Illinois law “clear and unambiguous” in concluding that the trial court correctly compelled appraisal. 5
Lastly, the court held that State Farm’s affirmative defense of late notice did not have any bearing on the right to demand appraisal. 6 In other words, the appellate court held that the claim of late notice may be a matter that would need to be resolved if the case continued beyond appraisal, but was not an issue that prevented or precluded appraisal.
1 Zhao v. State Farm Fire & Cas. Co., 2025 IL App (2d) 240723 (Ill. App. May 12, 2025).
2 Id. at ¶ 25.
3 Id. at ¶ 26.
4 Shelter Mutual Ins. Co. v. Morrow, 2023 IL App (5th) 230249-U (Ill. App. Aug. 24, 2023).
5 Zhao, 2025 IL App (2d) 240723 at ¶ 34.
6 Zhao at ¶ 38.
