We recently received a court order ordering State Farm Fire & Casualty Company to submit our clients dispute regarding the amount of loss it sustained under the terms of its insurance policy with State Farm Fire & Casualty Company to appraisal. As I stated in my last blog regarding appraisals (posted March 25, 2017), although a full scope appraisal may seem simple to a logic minded person, apparently, it is not so simple for an insurance company to allow its policyholder to go through the appraisal process to determine the policyholders amount of loss as it seems insurance companies cannot bring themselves to play fair or to do what is best for their policyholders. We again found this to be the case in the motions practice and oral argument the Court entertained in this case. In this case State Farm Fire & Casualty Company refused to submit our clients claim to appraisal arguing that since our client had filed a lawsuit against State Farm that it did not have to agree to go to appraisal to determine the insureds amount of loss.
The Court found in our clients favor and agreed with our argument that when the Court ruled that the appraisal provision is a stand alone provision in the policy not waived by litigation. I explained to the court that the rights of the parties are defined and determined by the contractual language contained in State Farm Fire & Casualty’s insurance policy with our client.
The appraisal provision in our clients insurance policy with State Farm Fire & Casualty Company was worded as follows:
Appraisal. If we and you disagree on the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:
- a. Pay its chosen appraiser; and,
- b. Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.
Although State Farm Fire & Casualty Company may deny a claim if the appraisal panel determines that the insureds loss was not incurred due to a covered peril, in this case State Farm Fire & Casualty Company had already agreed that the damage was due to a covered peril.
In this case, our client chose the route of having the appraisal clause in its insurance contract establish the amount of loss. The amount of loss is what the State Farm Property & Casualty Company owes out client for its damaged building.
I will post a blog with the appraisal panels determination regarding the amount of loss and discuss the original adjustment from State Farm Fire & Casualty Company and our clients general contractors estimate regarding the amount of loss once the appraisal result is received.