Almost all insurance contracts contain appraisal clauses. These clauses are discussed in a January 2020 opinion from the Southern District of Texas, McAllen Division. It is styled, Erasmo Gonzalez v. Allstate Texas Lloyds.
In this case, the Court had urged the parties to discuss appraisal early in the case and both parties assured the Court that appraisal would not be necessary. Months later, Erasmo invoked the appraisal provision in the insurance contract. This Court Ordered the appraisal and discussed it’s reasoning.
The appraisal process determines the value of damages, and courts decide liability. Absent illegality or waiver, the Texas Supreme Court has generally held in favor of enforcing appraisal clauses because denying the appraisal would vitiate the insurer’s right to defend its breach of contract claim. An insured waives its right to appraisal where (1) the parties reached an impasse; (2) there was unreasonable delay between the point of impasse and the insured’s demand for appraisal; and (3) the insurer shows it has been prejudiced by such delay. Waiver requires intent, either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.