Insurance lawyers seem to have a lot of confusion regarding insurance contracts with appraisal provisions contained within them and how to interpret and handle them. This issue was addressed in a January 2020 opinion from a Southern District of Texas, Houston Division. The opinion is styled, William A. Linnus and Sarah J. Linnus v. Metropolitan Lloyds Insurance Company of Texas.
Texas insurance policies frequently include provisions requiring or allowing appraisal to resolve disputes about loss amounts. An appraisal clause binds the parties to have the extent or amount of the loss determined in a particular way. An appraiser must decide the amount of loss, not to construe the policy or decide whether the insurer should pay. Unless the amount of loss will never be needed appraisals should generally go forward without preemptive intervention by the courts.
The contractual right to appraisal may be waived. The Texas Supreme Court in the opinion styled, In re Universal Underwriters of Texas Insurance Co., explained that: to constitute waiver of the right to appraisal the acts relied on must be reasonably calculated to induce the assured to believe that compliance by him with the terms and requirements of the policy is not desired, or would be of no effect if performed. The acts relied on must amount to a denial of liability, or a refusal to pay the loss. As the Court more recently concluded, waiver requires intent, either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.