Appraisal Request Found Inappropriate When Causation at Issue

    The court denied a motion to compel an appraisal upon determining the cause of the loss was still at issue. QBE Sec. Ins. Co., et al. v. The Enclave at Oak Hill Owners Association, 2023 U.S. Dist. LEXIS 107040 (S.D. Ala. June 21, 2023).

    Buildings at the Enclave were damaged by Hurricane Sally. Enclave submitted a claim for the loss to its insurers. Payment was made for some of the claimed loss, but the insurers disptued whether all fo the claimed damages resulted from Hurricane Sally. Enclave then sought to invoke the appraisal provision in the policies. 

    The insurers contended that the dispute involved issues of causation and coverage which were not subject to the apprisal provision. While Enclave contended that Hurricane Sally caused dmaage to many other parts of its buildings, which had to be repaired and replaced, the insurers argued that those other parts either were not damaged at all or were not damaged by Hurricane Sally. The insurers contended that becuase the parties had not agreed on causation nor coverage, and the court had not yet decided these issues, the appraisal request was premature. 

    The court noted that under Alabama law, appraisers did not have the authority to decide questions of coverage and liabiltiy in insurance disputes. Enclave acknowledged that there were factual disputes about whether some or all of its claimed damages were in fact caused by a covered loss. Therefore, because the dispute did not merely involve the amount of the loss, but the cause of the loss, appraisal was not appropriate at this time. Consequently, Enclave’s motion was denied.