Appraisal policy language is changing, and more case law is being developed at a faster rate than ever. These issues and lessons will be analyzed with the Insurance Appraisal and Umpire Association (IAUA), which will be hosting an educational and certification conference on February 19-20 at the StreamSong Golf Resort. I will be debating insurance defense attorney Illon Kantro from Berk, Merchant & Sims rather than my frequent and formidable nemesis Steve Badger.
An Order issued last week denying a Motion to Compel Appraisal caught my attention. 1 The standard insurance appraisal language requires a judge to appoint an umpire when the parties cannot agree. Most IAUA conferences warn about parties racing to the courthouse and unilaterally selecting an umpire. The Allstate policy language had the following language, which is a relatively new method of selecting an umpire if the appraisers disagree:
The appraisers will select a competent and impartial umpire. If the appraisers are unable to agree upon an umpire then an umpire will be appointed in the following manner:
a) You or we will request the American Arbitration Association (AAA) to select an umpire at:
American Arbitration Association
Case Filing Services
Attn: Allstate Texas Appraisal
1101 Laurel Oak Road Ste 100
Voorhees, New Jersey 08043
Email: casefiling@adr.org
(with subject matter as “Allstate Texas Appraisal”)b) Only if AAA advises you and us in writing that it cannot appoint an umpire may we then jointly request a judge of a district court in the judicial district where the residence premises is located to select an umpire. A judge of a district court does not include a commissioner or a judge of a county court at law, or a justice court, a municipal court, a probate court, or of a commissioner’s court.
This is a new appraisal process in which I have never participated or have knowledge. Given that Allstate has written it, my concern is that Allstate is trying to stack the deck by having an American Arbitration Association (AAA) umpire selected rather than parties selecting one by a local judge. But that is a personal concern based upon experience with Allstate and not based upon any current knowledge of how Allstate set this up with the AAA. I would appreciate feedback from those with greater knowledge or experience. I even invite comments from Allstate about their reasons and motives for using the AAA.
Allstate argued the following points, among many, why the claim dispute should not be sent to appraisal:
By demanding appraisal and filing her Motion to Compel Appraisal and Abatement, Plaintiff is attempting to avoid addressing the overarching and serious coverage issues in this case, the seemingly duplicative damage claimed against Allstate for long-term water/leak damage. Plaintiff’s Motion ignores the key policy requirement that the parties must ‘fail to agree on the amount of loss’ before either party can invoke appraisal.
The effect of an appraisal provision is to estop one party from contesting the issue of damages in a suit on the insurance contract, leaving only the question of liability for the court.
Allstate specifically requested Plaintiff to provide documents from the prior seven (7) water damage claims evidencing repairs to the property before further pursuing appraisal for the current water damage claim.
The only information Allstate has at this point is that Plaintiff reported a water damage claim for the seventh time within the past four years, that has since been repaired, without any support as to who repaired it, when it was done, and how much said repairs cost, made by Plaintiff at the same address. Because Plaintiff has failed to provide the requested documentation, Allstate intends to issue subpoenas for this information from the insurance companies listed in the chart above.
The court agreed with Allstate, finding that the matter was not ripe for appraisal:
Plaintiff filed a claim on May 23, 2023 for leaking/busted pipes at her property that was insured by Defendant. The claim alleged that four rooms in the property sustained water damage, but that the pipes were already fixed. That same day, Allstate acknowledged Plaintiff’s claim and requested a completed Proof of Loss statement, estimates for alleged damages, and receipts for repairs already made. Over several months following the initial claim, the only actions Plaintiff took were to file another claim with a new loss date, and a letter of representation. As of the date of this Order, the Court has not been made aware that Plaintiff has ever responded to Defendant’s requests.
Instead, Plaintiff seeks to compel appraisal and abate the suit because ‘[c]ompletion of appraisal in accordance with Defendant’s policy is a condition precedent to filing suit on the insurance contract.’ According to Defendant, however, cooperation with the insurer, too, is a condition precedent….
Plaintiff’s motion fails to provide any justification or explanation for her failure to comply with her contractual obligation that operates as a condition precedent to the appraisal provision she is seeking to enforce. Plaintiff’s Motion to Compel Appraisal and [for] Abatement is DENIED without prejudice and this suit is ABATED until Plaintiff provides evidence that she has complied with the Policy’s requirements for the enforcement of the appraisal provision.
The practical lesson from the ruling is that appraisal is not appropriate if the policyholder has not complied with reasonable and timely requests for information and documents by the insurance company. Allstate’s able counsel from Thompson Coe laid out various facts and dates regarding the relevant need for the requested information and the policyholder’s complete failure to provide any information before demanding appraisal.
StreamSong is a new resort in west central Florida with an amazing golf course. I hope to see you there so we can learn more about the ever-changing landscape of appraisal.
Thought For The Day
“The biggest communication problem is we do not listen to understand. We listen to reply.”
—Stephen R. Covey
1 Roland v. Allstate Vehicle & Prop. Ins. Co., No. 4:24-cv-01710 (S.D. Tex. Jan. 31, 2025).
