Appraisal Panel Can Determine Causation of Loss under Ohio Law

    The federal district court granted the insured's motion to compel an appraisal that would include a determination of causation of the loss. Eagle Highland Owners Association v. State Farm Fire and Casualty Co., 2023 U.S. Dist. LEXIS 220937 (S.D. Ohio Dec. 12, 2023).

    Plaintiff argued its property suffered wind and hail damage from a storm on June 18, 2021. A claim was submitted to State Farm. State Farm's investigation determined the loss to be $0.00. Plaintiff's investigator determined the loss to be $586,647.08 in repair costs.

    State Farm opposed appraisal because, in its view, the damage arose from a loss in 2019, not from the June 18, 2021 storm. Plaintiff submitted a loss claim in 2019 for damage that State Farm alleged was exactly the same as the damage alleged in the loss claim for the June 18, 2021 storm. Therefore, State Farm did not view the matter as a dispute over an amount of loss, but rather over whether a loss even occurred on June 18, 2021.

    The court agreed with plaintiff that appraisal was the appropriate remedy to resolve the factual disputes in the case. Ohio courts had found that, where appraisal is used to determine the extent of a loss, doing so required appraisers to separate covered damage from uncovered damage. Further, where an appraisal provision was otherwise silent as to how an appraiser should measure the extent of a loss, courts in a variety of jurisdictions, including Ohio, interpreted the process to require a causation analysis. Appraisal was the appropriate remedy where the policy provision was silent as to resolving issues of causation. 

    Therefore, plaintiff's motion to compel appraisal was granted.