In a decision issued on June 13, the Minnesota Supreme Court analyzed whether the cause of loss, in addition to the amount of the loss, was a determination to be made by the insurance appraisal process.
In Quade v. Secura Insurance, there was a dispute regarding property damage from a windstorm. The insurance company took the position that some of the damage claimed by the insured was not caused by the windstorm, but rather continual deterioration over time. The insurance policy required that the appraisal process be initiated prior to a lawsuit being commenced. The insured did not initiate the appraisal process, but instead brought an action directly in district court. The insured contended that the appraisal clause didn’t apply because the dispute was about whether the damage was covered by the policy, not the cost of that repair, and that the question was a coverage question inappropriate for an appraisal panel. The district court disagreed with the insured and held that the appraisal process had to be used. The court of appeals reversed. The Supreme Court then took up the case.
The Supreme Court held that the insurance policy’s language concerning the appraisal process’s determination of the amount of loss includes a determination of the cause of the loss. As a result, where there is a dispute about what the cause of certain damage was, the question is one to be determined by an appraisal panel. The Court was careful to clarify that the appraisal process can’t construe the policy or decide whether an insurer can pay, but it does determine the amount of loss, which includes determining what the cause of the loss claimed was. The Court noted the public policy in favor of appraisals.
A copy of the decision can be found here.
This blog entry is written by Chris Renz, a shareholder at Thomsen Nybeck. Chris practices in the litigation area of the firm with primary focus on real estate litigation, employment litigation, insurance law, townhome and condominium law, and criminal law. Chris and his colleagues at Thomsen Nybeck have extensive experience representing clients in insurance appraisal hearings. More regarding the firm’s abilities in that area can be found here.