Reading The Insurance Policy

Insurance policies need to be read carefully and complied with.  The reason is that most times the courts are going to enforce the insurance policy provisions.  This is illustrated in a 2019 opinion from the Southern District of Texas, Galveston Division.  The case is styled, Benjamin Ford, et al v. United Property & Casualty Insurance Company, et al.

The Fords had a homeowners policy with United.  The Fords filed a claim with United for damage to their home resulting from a hurricane.  United inspected the claim and offered a cash settlement of $7,105.74.  The Fords rejected the offer and sought another inspection, after which, United made a “supplemental payment of $31,053.89.  This payment was also rejected causing United to invoke the appraisal provision in the homeowner’s policy on January 18, 2018.

Two months later, the Fords sent a pre-suit demand letter to United.  United responded by invoking the appraisal right again.  The Fords then filed this lawsuit.  United filed a motion with the court seeking an Order that appraisal be compelled.

The Court ruled that the parties should be compelled to participate in appraisal.

Appraisal clauses are commonplace in property insurance policies and provide a less expensive, more efficient alternative to litigation over the amount of loss for a covered claim.  Because of this, Texas courts consistently have held that appraisal clauses should generally go forward without preemptive intervention by the courts.  The courts will decide to not enforce appraisal clauses where it feels the right to invoke appraisal has been waived.  The party seeking to defeat appraisal bears the burden of proof.  A party opposing appraisal must provide evidence of acts “reasonably calculated to induce the assured to believe that a compliance by him with the terms and requirements of the appraisal clause is not desired, or would be of no effect if performed.”  There must be proof that the party waiving appraisal intentionally relinquished its appraisal right or acted in a way inconsistent with claiming that right.

To see whether a party has waived its right to appraisal requires an examination of the circumstances and the parties conduct, not merely a measure of the amount of time involved in seeking appraisal.  In this case, United as consistently asserted its appraisal right over the life of this dispute.  United cannot be characterized as having acted in a way that induced the Fords to believe that compliance with the terms and conditions of the appraisal clause was not desired.