In a recent decision by the U.S. District Court for the Eastern District of Wisconsin, a federal judge issued a decision denying the property owner’s request for valuation, arguing that the insurance policy’s appraisal provision is “limited to valuation disputes, not causation or coverage.”1
The case arose from a fire that occurred in the plaintiff’s home. Plaintiff and State Farm each retained separate contractors to estimate the cost of repairing the fire damage. After many exchanges and revisions between the contractors, the plaintiffs finally demanded an assessment. State Farm essentially rejected the request, stating that even if it were to include an assessment of the areas where the contractors had “price differences”;, it would not include an assessment of areas where there were differences in “scope”.
The plaintiffs requested a summary judgment and requested that the court give a decision requiring State Farm to participate in the assessment process. The plaintiffs argued that the “amount of the loss” in the assessment provision included provisions on the extent or extent of the damage and the method of repair. Unfortunately, the Eastern District of Wisconsin did not agree that “the assessment process is limited to circumstances where the insurer and the insured disagree on the” size of the loss “, on the valuation of the loss, not the extent or extent of the damage and the method of repair.” In other words, the court held that an appraiser would not take into account what caused each damage, only the cost of repairing the damage.
It is unclear, based on the opinion, whether the plaintiffs’ representative supported its argument with the well-established case law on assessment from the Northern District of Illinois, which states that disputes about (a) causation (whether a covered hazard caused damage), (b) the extent of the damage ( the extent or extent of the physical damage from the covered hazard); .2
Although not binding on the Eastern District of Wisconsin, decisions in the Northern District of Illinois would be considered convincing authority, which a court may consider.
Unfortunately, in the future, it is likely that insurance companies in the state of Wisconsin will use this decision to support further denial of assessment.
1 Higgins v. State Farm Fire & Cas. Co., No. 1:22-cv-00198, 2022 U.S. Dist. LEXIS 117477 (ED Wis. July 5, 2022).
2 Looks Khaleel v. AmGuard Ins. Co., 2022 US Dist. LEXIS 24851 (ND Ill. 11 February 2022); B&D Investment Group, LLC v. Mid-Century Ins. Co., 2021 US Dist. LEXIS 246853 (ND Ill. 28 December 2021); Adam Auto Group, Inc. v. Owners Ins. Co.2019 WL 4934597 (ND Ill. October 7, 2019); Windridge of Naperville Condo. Ass’n v. Philadelphia Indem. Ins. Co.2018 WL 1784140 (ND Ill. 13 Apr. 2018); Spring Point condo. Ass’n v. QBE Ins. Corp.2017 WL 8209085 (ND Ill. 13 Dec. 2017); Runaway Bay Condo. Ass’n v. Philadelphia Indem. Ins. Cos.262 F.Supp.3d 599 (ND Ill. 25 Apr. 2017); Windridge of Naperville Condo. Ass’n v. Philadelphia Indem. Ins. Co.2017 WL 372308 (ND Ill. January 26, 2017); Philadelphia Indem. Ins. Co. v. Northstar Condo. Ass’n15 cv 10798 (ND Ill. 18 October 2016 (DE 34)).