Processes In Adjusting A Claim

Insurance lawyers need to know what the policy at issue says and how the courts interpret those policies and make their rulings.

For a homeowners policy, the 2018 Eastern District of Texas, Sherman Division, opinion styled, Rainey Rogers v. Nationwide General Insurance Company, is a good read.

The Rainey case arises out of a dispute between a policyholder and Nationwide regarding the extent of damages and the amount of loss suffered to Rainey’s property.  On March 26, 2017, the property suffered damage due to storm-related conditions and Rainey made a claim for benefits.

An adjuster inspected the property of April 24, 2017, and found no damage to Rainey’s tile roof.

Rainey requested a second inspection which was performed on June 20, 2017, and it was determined there was damage to three tiles.  A new estimate was completed on June 23, 2017, and Nationwide issued a letter accepting the partial damage but denied the full replacement value that Rainey had requested.

On August 10, 2017, Rainey’s public adjuster submitted an estimate for repairs totaling $163,497.12.  On September 12, 2107, the first Nationwide adjuster completed a revised estimate and maintained his position of denial for the full roof replacement.

On February 21, 2018, Rainey filed this lawsuit for violations of the Texas DTPA, Texas Insurance Code, and breach of contract.  Rainey and Nationwide participated in various litigation efforts and on June 27, 2018, Nationwide invoked the appraisal portion of the policy at issue.  Rainey advised Nationwide that he would not agree to proceed with appraisal and thus, the parties are before the Court disputing what should be done regarding appraisal.

Appraisal clauses are a common part of insurance contracts and spell out how parties will resolve disputes concerning a property’s value or the amount of the covered loss.  These clauses are generally enforceable absent waiver or illegality.  Once invoked, courts are discouraged from interfering with the appraisal process.  But, a valid does not divest the courts of jurisdiction, but only binds the parties to have the extent or amount of the loss determined in a particular way.

Rainey argues that Nationwide waived its ability to demand appraisal because Nationwide failed to invoke the appraisal provision within a reasonable time after an impasse had been reached.  Nationwide argues that even if the Court finds waiver, there is no prejudice.

The Texas Supreme Court has found that “waiver requires intent, either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.”

Rainey says Nationwide unreasonably delayed invoking the appraisal for six months after impasse and four months into active litigation and that he suffered prejudice as a result of the delay.

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.  Many of the benefits of appraisal are lost if a party is allowed to delay invoking the appraisal.

The Court reviewed the pleading and arguments and eventually ruled in favor of Nationwide.  This case is a good reading to see how the courts analyze these situations.