Jean-Paul Rudd | Partner | Adams and Adams | mail me |
Insurance disputes and appraisals often arise when determining the value of damaged or destroyed property under policy limits.
Disputes often arise between insurers and policyholders regarding the value of insured property. Some of these disputes are resolved with little difficulty, as the value can be relatively easily established. For example, when a storm causes partial damage to a home and its contents, the insured property remains assessable.
Other disputes are more challenging, especially when a home and its contents have been completely destroyed. Such destruction can occur during events like hurricanes or fires. In these cases, an appraiser is often required to determine the value of the insured property.
To complicate matters further, insurance policies often have limits on coverage amounts for specific property types or damage. These limits can create situations where repair or replacement costs exceed the policy’s maximum payout.
Disputes and appraisals – US Case Study
An example of such complexities is seen in a recent case from Florida, USA, after Hurricane Ian. The U.S. District Court for the Middle District of Florida handled this property dispute in Wood vs GeoVera Specialty Insurance Company.
Following Hurricane Ian, Nancy and John Wood filed a claim with GeoVera Specialty Insurance Company. Disagreements over damage valuation led to the involvement of an appraiser. The appraisal revealed damages exceeding the policy’s limits for specific items. GeoVera paid the policy’s maximum allowable amount but refused to cover additional sums indicated by the appraisal.
As a result, the Woods initiated legal action against the insurer to recover the difference. The difference in certain items was significant. For instance, damage to the pool enclosure was appraised at $12,695.00, but the policy limit was only $5,000.00. The court ruled GeoVera was not obligated to pay more than the policy limit, even if the damage exceeded this amount.
Insurance policy limits versus property damage
Disputes can also focus on the cause of the damage, not just its extent. In the Woods’ case, the interior damage was appraised at $52,282.00. While their policy limited water damage coverage to $10,000.00 under a water damage endorsement, there was no specific limit for wind damage.
The court noted it was unclear whether the appraisal attributed the interior damage to water or wind. As a result, the court postponed its decision on this issue to allow for further evidence about the damage’s cause.
Appraisals assist in determining the extent of loss but do not override unambiguous policy limits.
