J. Ryan Fowler | Property Insurance Coverage Law Blog | July 10, 2018
I often take calls from potential clients and public adjusters frustrated with an insurance company that has denied, delayed and then underpaid a claim and then ultimately invoked appraisal. Often the insured or public adjuster states that multiple inspections have taken place with substantial correspondence between the parties and the question is, “can the insurance company do that? It has been too long and time and resources have been wasted. Can we argue the insurance company waived the right to invoke appraisal?”
The San Antonio Court of Appeals recently looked at this issue in a case in litigation.1 In the case at issue the insurance company invoked appraisal three months after being ordered to be ready for trial; after multiple depositions had been taken; experts had been designated and multiple motions filed. The insured refused to participate in appraisal and argued the insurer had waived the right to invoke appraisal. The trial court denied insurer’s motion to compel appraisal and the insurer filed a writ of mandamus to the appellate court.
The appellate court first looked at the nonwavier clause in the policy. The insurance company argued that it was determinative of all issues since the alleged wavier of the appraisal provision was not done in writing. The nonwaiver clause read:
This policy contains all the agreements between you and us concerning the insurance afforded….This policy’s terms can be amended or waived only by endorsement issued by us and made a part of this policy.
The court held that the inclusion in an insurance contract of a broadly-worded nonwaiver clause such as the one in this case is not dispositive, as a matter of law, on whether the insurer waived any of its rights under the contract.
The appellate court next addressed prejudice to the insured. The insured argued that the financial impact of the insurance companies conduct exceeded $145,000 to the insured. The insured pointed out that several depositions, motions, expert retentions, mediation and even a declaratory act have been required because of insurers litigation conduct and the case had actively been litigated for months between the parties.
The court looked at the fact that the appraisal provision allowed either party to invoke appraisal and that if a party knows of its right to request an appraisal and does not make that request, it is difficult to attribute the costs incurred to the opponent.
The court ultimately held that the trial court erred by denying the insurance companies motion to compel appraisal because the insured did not show prejudice.
So, the answer ultimately is fact intensive for a case but often: Yes, the insurance company can invoke appraisal and they didn’t waive the right to appraisal.
1 In re American National Prop. and Cas. Co., No. 04-18-00138-CV (Tex. App. – San Antonio, July 5, 2018).