Christina Phillips | Property Insurance Coverage Law Blog | September 3, 2019
Dewey Hill owned eight townhome buildings in Minnesota insured by Auto-Owners.1 On August 16, 2013, a hail and windstorm damaged the buildings. Three days later, Dewey Hill notified Auto-Owners of the loss and submitted written property loss notices ten days later. Auto-Owners investigated the claim and approximately nine months later issued its first payment to Dewey Hill. A second payment was made by Auto-Owners approximately four months after that.
Dewey Hill disputed the sufficiency of the payments and ultimately the parties proceeded to appraisal. An award was entered, and Auto-Owners issued payment, representing the full and final amount of the appraisal award.
Dewey Hill sued Auto-Owners claiming interest under Minn. Stat. § 549.09. After the trial court awarded Dewey Hill pre-judgment interest, Auto-Owners appealed.
In relevant part, Minn. Stat. § 549.09 provides:
Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest on pecuniary damages shall be computed…from the time of the commencement of the action or demand for arbitration, or the time of a written notice of claim, whichever occurs first, expect as provided herein. The action must be commenced within two years of a written notice of claim for interest to being to accrue from the time of the notice of claim.
Ultimately, the appellate court concluded there was no err in determining that Dewey Hill was entitled to preaward interest. It further concluded that Dewey Hill was not entitled to interest from the date it filed its claim, but rather interest began to run from the date appraisal was demanded.
Section 549.09 unambiguously provides for preaward interest on an appraisal award. However, here, because the insured had not filed suit within two years of the date of loss, the appellate court affirmed the trial court’s determination that interest would not be awarded from the date of notice of the claim. Rather, interest would begin to accrue from the date of the demand for appraisal.
While unpublished, this case serves as a good reminder of that even if in the appraisal process, suit needs to be filed within two-years of the written notice of the claim. It is important to note, however, this two-year timeframe will extend no other limitation period within a policy. Therefore, it may become necessary to diary multiple deadlines including the deadline to commence suit under the policy and the two-year deadline from the date the claim was made to recover prejudgment interest.
1 Dewey Hill III Townhomes Association, Inc. v. Auto-Owners Ins. Co., No. A18-1562, 2019 WL 3000691 (Ct. App. Mn. July 1, 2019).