Hail Claims And Appraisal

Forth Worth lawyers handling hail damage claims need to read a recent opinion from the Amarillo Court of Appeals. The case is styled, In Re GuideOne National Insurance Company.
The case involves two insurance claims: one for fire damage and another for wind or hail damage to property. The insurer is GuideOne who sought appraisal in this case. A lawsuit had been filed and the property owners requested that the Court not allow the appraisal. This request was sought long after the law suit had been filed and the property owners had incurred substantial costs. The Court denied the appraisal request and this mandamus action followed. This Court upheld the trial Court decision.
Appraisal clauses provide a means to resolve disputes about the amount of loss for a covered claim. As the Texas Supreme Court has explained: “In every property damage claim, someone must determine the ‘amount of loss,’ as that is what the insurer must pay. An appraisal clause ‘binds the parties to have the extent or amount of the loss determined in a particular way.'”
Appraisal is intended to take place before suit is filed. Appraisal is favored because appraisals require no attorneys, no lawsuits, no pleadings, no subpoenas, and no hearings. If a party is allowed to delay invoking appraisal until suit is well underway, many of the benefits of appraisal are lost. Thus, it is possible for a party to waive its right to appraisal by delaying.
The right to demand an appraisal accrues when the parties reach an impasse in their negotiations. Once the parties have reached an impasse – that is, a mutual understanding that neither will negotiate further – appraisal must be invoked within a reasonable time. An impasse does not occur just because the parties disagree about the amount of loss; rather an impasse is reached when it becomes apparent to both sides that they disagree as to the damages and further negotiations are futile. Although an impasse can be established at an earlier point, denial of the claim generally causes the parties to reach an impasse. An impasse can exist despite the fact that the parties are engaged in continuing efforts to resolve their dispute, including mediation.
Here, in July 2014, GuideOne declined payment for the hail and wind damage claim, citing the wear and tear exclusion in the policy, and tendered a payment for the fire claim in an amount Sherman Hospitality found unsatisfactory. Sherman Hospitality filed suit in September 2014. In view of its own denial of the claim, its insured filing suit, and the absence of any ongoing negotiations from July 2014 through the date of mediation, it is not surprising that there is no suggestion in the mandamus record of a genuine belief by GuideOne that negotiations regarding the existence or amount of loss remained ongoing and would prove productive during the more than six months between the filing of suit and GuideOne’s request. During that time Sherman Hospitality was required to incur the costs of hiring experts to assess and value its damages for litigation purposes, thereby reducing or eliminating entirely the efficiencies appraisal is intended to provide. The trial court did not abuse its discretion in concluding that GuideOne waived its right to seek appraisal.