Appraisal Ordered After Carrier Finds Loss Even if Cause Disputed

Tred R. Eyerly | Insurance Law Hawaii

    The court ordered an appraisal when the parties differed on the amount of loss to the dwelling even when the carrier contended the dispute was over the cause of the loss. Khaleel v Amguard Ins. Co., No. 21 C 992, Memorandum Opinion and Order (N.D. Ill. Feb. 11, 2022). The order is here.

    Plaintiffs home was damaged by wind and hail. A claim was submitted to Amguard for damage to the roof. Amguard found there was hail damage to the soft metal vents on the roof and estimated repair costs to be $3,815.16. Amguard found no damage to the roof itself. Plaintiffs contended there was additional damage to the roof. Plaintiffs demanded an appraisal. Amguard rejected the appraisal demand, claiming that the damage to the roof was due to wear and tear, and therefore constituted an excluded cause under the Policy. 

    Plaintiff filed suit. After Amguard answered, plaintiffs moved for judgment on the pleadings. 

    Under the policy, if the parties disagreed as to the “amount of loss,” either party could request an appraisal. A coverage dispute was handled by the court, but a dispute for loss was for the appraiser to determine. Plaintiffs asserted that when the insurer admitted there was a covered loss, finding the extent and causation of the damage was part of the “amount of loss” determination and was subject to the appraisal clause. Amguard framed the dispute as whether the damage to the roof was caused by hail or by wear and tear (the latter being excluded from coverage). Amguard contended that it had not admitted coverage for the hail damage to the roof, and thus, this was a coverage dispute and appraisal was inappropriate. Amguard had acknowledged hail damage to the soft metal vents on top of the roof, but denied that the roof itself was damaged by hail.

    Numerous courts within the district agreed with plaintiffs and routinely rejected the argument that issues implicating damage causation were not appropriate for resolution by appraisal.This court agreed with those cases and plaintiffs’ reading of the policy. Because Amguard agreed that some portion of the dwelling was damage by hail and constituted a covered loss, this suit was not a coverage dispute but a dispute over the amount of loss. Consequently, appraisal was appropriate,. Otherwise, the insurer could separate its coverage based on individual components of the building such as each roof shingle, gutter, or vent cover. The policy did not permit such a reading because it granted coverage to the dwelling as a whole. 

    The court granted plaintiffs’ motion for judgment on the pleadings.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

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