PROPERTY DAMAGE APPRAISALS IN TENNESSEE

By Jonathan L. Bobbitt | January 4, 2024

IF YOU HAVE A DISPUTE WITH YOUR INSURANCE COMPANY CONCERNING THE AMOUNT OF A LOSS, CONSIDER THE APPRAISAL CLAUSE IN YOUR PROPERTY INSURANCE POLICY

PROPERTY DAMAGE APPRAISALS IN TENNESSEEIf your property has sustained a loss from a storm, fire, or other covered peril and there is a dispute as to the amount of that loss between you and the insurance company, “appraisal” may help resolve the claim. The appraisal process is an alternative dispute resolution method found in nearly all property insurance policies that requires the appointment of a three-person appraisal panel (two “party appraisers” and a neutral “umpire”), which are tasked with the responsibility of determining the amount of a loss. Most insurance policies mandate that appraisal be conducted if two conditions are met: (1) there is a dispute concerning the amount of the loss; and (2) a written demand for appraisal (by either party) is made.

Appraisal is designed to resolve the amount of loss disputes, but not to resolve questions of coverage (i.e., whether the loss is covered under the terms of your insurance policy). Several recent cases handled by McWherter Scott & Bobbitt attorneys have carved out the nuances of the appraisal process, resulting in some key takeaways that may prove useful to policyholders in Tennessee:

  • An appraisal is mandatory under an insurance policy when properly invoked by either party. (Morrow v. State Farm Fire & Cas. Co., 592 F. Supp. 3d 672 (E.D. Tenn. 2022); Ingram v. State Farm Fire & Cas. Co., 2021 U.S. Dist. LEXIS 245457 (E.D. Tenn. Dec. 14, 2021)).
  • When at least some storm damage is covered, the dispute should be treated as one concerning the total amount of loss. (Ingram, 2021 U.S. Dist. LEXIS 245457).
  • A dispute over the scope of work is appraisable as part and parcel of such an amount of loss dispute because it concerns the proper means and methods of necessary repair to a property. (State Farm Fire & Cas. Co. v. Harper, 2021 U.S. Dist. LEXIS 245383 (M.D. Tenn. Aug. 13, 2021)).
  • “Scope” is part of the “amount of loss” and is not limited to the insurance company’s scope of work. (Smith v. State Farm Fire & Cas. Co., 2021 U.S. Dist. LEXIS 245386 (W.D. Tenn. Oct. 27, 2021)).
  • Any remaining disputes concerning coverage and causation may be resolved by a court after the completion of the appraisal process. (Smith, 2021 U.S. Dist. LEXIS 245386; Kush Enters., LLC v. Mass. Bay Ins. Co., 2019 U.S. Dist. LEXIS 241191 (E.D. Tenn. Nov. 7, 2019)).

There are several reasons why appraisal is a valuable and useful tool to avoid litigation. First, appraisal, as opposed to litigation, is a quicker and less expensive way to resolve an insurance claim. Second, it is a process where the means/methods of repair and repair costs are determined by a neutral and unbiased panel of experts on the particular subject matter. This is a benefit that protects the interests of both the insurance company and the policyholder. And lastly, most policies state that the appraisal award sets the amount of loss which should bring some finality to any amount of loss dispute.

In the end, appraisal may be the right tool to help you in facilitating a more efficient resolution of your insurance claim. We invite you to read more about our cases. If you have questions concerning this process, please feel free to reach out to McWherter Scott & Bobbitt by calling us or through our contact form.

 

Posted in Insurance Disputes