Christina Phillips | Property Insurance Coverage Law Blog | July 30, 2017
The Minnesota Supreme Court recently held that Minnesota Statute §549.09 does not require an underlying breach of contractor or actionable wrongdoing to recover preaward interest on an insurance appraisal award in Poehler v. Cincinnati Insurance Company.1
The insured’s home was damaged by a fire, for which Cincinnati made an initial payment. The insureds ultimately demanded appraisal under the policy. Ultimately, the appraisal panel issued an award finding that the insureds were entitled to $88,480 more than Cincinnati had previously paid. The insured filed suit seeking confirmation of the appraisal award and seeking preaward interest under Minnesota’s statute on interest on verdicts, awards and judgments. The district court confirmed the appraisal award and granted prejudgment interest from the date of the appraisal demand, to the date of the award. The district court concluded that Cincinnati had “undervalued” the loss and left the insured to “bear a significant portion of the burden of [the] loss.” The court of appeals reversed concluding the preaward statute did not apply to an appraisal award under a policy.
The Minnesota Supreme Court concluded that the court of appeals erred and found that Minn. Stat. § 549.09 does not require a finding of wrongdoing to recover pre-award interest on appraisal awards. In reviewing the plain and unambiguous language of the statute, the Minnesota Supreme Court concluded that permitting interest on “pecuniary damages” included those awarded by insurance appraisers, as they were not specifically excluded under the statute.
The court then concluded that the insurance policy’s loss payment provision did not prohibit recovery of interest on the appraisal award. Because the policy did not include contractual language explicitly precluding preaward interest, recovery was permitted. Last, the court concluded that the loss payment provision in Cincinnati’s policy provided the insured the basic rights and benefits mandated by Minnesota’s standard fire insurance policy. Specifically, if the Cincinnati policy provided a shorter payment schedule than the statutory provision and omitted the “interest” language of the Minnesota standard fire policy in section 65A.01, the policy provided great benefits and broader coverage to the insured. As such, the loss payment provision in the policy governed and did not preclude preaward interest on the appraisal.
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1 Poehler v. Cincinnati Ins. Co., No. A15-0958, 2017 WL 3045531 (Minn. July 19, 2017).