Appraisal Required to Establish Amount of Loss
The plaintiff, Shelter Mutual Insurance Company (Shelter), appealed the
circuit court of Coles County's March 28, 2023, oral pronouncement
denying its motion for judgment on the pleadings and ordering the
parties to proceed forward with the appraisal process as outlined in the
at-issue insurance policy, and the circuit court's written March 30,
2023, order memorializing the same. In Shelter Mutual Insurance Company
v. Tim Morrow and Jodie Morrow, 2023 IL App (5th) 230249-U, No.
5-23-0249, Court of Appeals of Illinois, Fifth District (August 24,
2023) was asked to determine if appraisal could be compelled.
BACKGROUND
Shelter issued a homeowners insurance policy to the Morrows (the
Policy). The Policy was in effect from April 7, 2021, to April 7, 2022.
The policy provided:
Appraisal
If you and we fail to agree on the market value, total restoration cost,
actual cash value, or amount of loss, as may be required in the
applicable policy provision, either party may make written demand for an
appraisal. ...
The appraisers shall then appraise the loss, stating separately the
market value, total restoration cost, actual cash value, or loss to each
item as may be required in the applicable policy provision....
On December 10, 2021, a hail and windstorm occurred affecting the
Morrows' property. The Morrows submitted a claim to Shelter for damage
allegedly sustained because of the storm. Shelter inspected the claimed
property damage and determined that the damage added up to less than the
Morrows' deductible of $1000. In response, the Morrows obtained their
own report and estimate from a public adjuster, the Accuval Group LLC,
dated December 21, 2021. That report indicated that a complete tear-off
and replacement of the residence roof and garage roof, as well as
removal and replacement of the fencing would be necessary at a total
cost of $38,198.15, less the $1000 deductible.
Following this report, Shelter obtained a second assessment, this time
from Donan Engineering, dated February 2, 2022. That report concluded
that some of the damage claimed was attributed to the storm, but other
damage claimed was not. That report found that much of the damage was
attributable to installation errors, inadvertent man-made damage, and
sealant strip failure. On February 8, 2022, Shelter sent a letter
informing the Morrows that it continued to view the loss as not
exceeding their deductible.
The Morrows answered the complaint and filed counterclaims asserting
breach of contract and bad faith, specifically alleging bad faith for
Shelter's refusal to submit to the appraisal process as outlined in the
Policy and as previously invoked by the Morrows on May 5, 2022.
The circuit court denied the motion for judgment on the pleadings and
ordered the parties to proceed with the appraisal process as previously
invoked by the Morrows and as outlined in the Policy.
ANALYSIS
An appraisal clause is analogous to an arbitration clause. The Court of
Appeals held that an order denying a motion to dismiss was tantamount to
an order denying arbitration.
Shelter's assessment acknowledged that a tornado touched down
approximately 1.8 miles northwest of the Morrows' property on the date
of the storm. The report acknowledged that "higher wind speeds affected
[the Morrows'] property." Based upon these facts alone, it is evident
that the question at issue is not whether a covered loss occurred
because a covered loss was found by Shelter's own adjuster in its
report. Therefore, the true dispute of the parties is the amount of that
covered loss.
This case involves a determination of the "amount of loss," which is
expressly stated within the appraisal clause as an appropriate issue for
determination under that process
The Court of Appeals affirmed the circuit court’s oral pronouncement.