Tred R. Eyerly | Insurance Law Hawaii
The Connecticut Supreme Court determined that an appraisal panel could resolve whether the insurer must replace undamaged materials so that they match the damaged materials. Klass v. Liberty Mut. Ins. Co., 2022 Conn. LEXIS 2 (Conn. Jan. 11, 2022).
The insured reported damage to the roof of his home to Liberty Mutual. A representative from Liberty Mutual inspected and noticed a few shingles missing from the rear slope of the roof. The representative agreed that the damage was caused by wind damage, a covered loss under the policy. Liberty Mutual accepted coverage and issued an estimate to replace the rear slope of the roof. The insured’s contractor inspected the roof and provided an estimate that contemplated replacement of the entire roof at nearly double the cost of Liberty Mutual’s estimate.
The insured requested an appraisal. Liberty Mutual responded that the insured could not invoke the appraisal process in the absence of a “competing” estimate (i.e., one that addressed the claim for which coverage was accepted). Any dispute regarding the matching of the front and rear roof slope was a question of coverage, not an issue for appraisal.
Liberty Mutual’s appraiser then inspected the roof and concluded that “given the roof configuration, it is reasonable to conclude that the shingles along the rear slope and ridge caps can be replaced such that a reasonable uniform appearance of the roof covering is maintained.” Consequently, coverage was denied for the front roof slope. Given the denial of coverage for the front portion of the roof,, Liberty Mutual contended there was no valuation issue remaining for the appraisal process.
The insured then filed an application to compel an appraisal. The lower court ordered an appraisal.
Liberty Mutual appealed, contending the dispute was a coverage dispute and improper for the trial court to compel appraisal before the legal issue regarding the coverage dispute were resolved by the court.
The issue was whether a dispute as to the scope of an insurer’s replacement obligation under the state matching statute was a question of coverage to be resolved by the courts or a question of the amount of loss to be resolved by the appraisal panel. The court concluded that it was the latter.
Liberty Mutual’s own appraiser reached a conclusion on the very issue that Liberty Mutual claimed was a legal question that was improper for resolution by appraisers. The report stated that the purpose of this examination was to “determine the scope of damage to the roof . . . ” He noted both sides of the roof presumably were not visible from the ground and reached a conclusion that replacement of only the damaged rear sides of the roof and roof ridges would be covered.
The court concluded that, when an insurer concedes the existence of a covered peril to an insured’s premises, issues concerning the extent of the insurer’s obligation to replace adjacent, undamaged items to achieve a reasonably uniform appearance was a component of the “amount of loss” and were part of the appraisal process. The parties’ disagreement regarding how many shingles needed to be replaced – whether it be only the missing shingles or the entire roof – in order to make the insured whole was a factual dispute that fell within the scope of the policy’s appraisal clause. Therefore, the judgment below was affirmed.
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